New Delhi [India], January 29 : Chief Economic Advisor, V. Anantha Nageswaran, on Thursday said India's economic growth momentum has strengthened alongside a marked easing in inflation as the data highlights robust domestic demand drivers and a sharp moderation in price pressures through FY26.
While giving a detailed presentation on the Economic Survey, CEA said the Real GDP growth has improved steadily, rising from an average of 6.4 per cent during FY12-FY20 to 6.5 per cent in FY25, and is projected to accelerate further to 7.4 per cent in FY26.
"If you look at the last few years in comparison to pre-COVID average, real GDP growth pre-COVID was 6.4% and in FY 25 was 6.5% and this year it is predicted to be 7.4%," he said.
The CEA said that growth is being supported by strong domestic fundamentals, including consumption and investment.
"Private consumption expenditure (PFCE) growth remains resilient, increasing from 6.8 per cent in FY12-FY20 to 7.2 per cent in FY25, before moderating slightly to 7.0 per cent in FY26. Meanwhile, investment activity has picked up sharply, with real Gross Fixed Capital Formation (GFCF) growth rising from 6.3% in FY12-FY20 to 7.1 per cent in FY25, and further to 7.8 per cent in FY26, underscoring sustained capital formation," he said.
On the inflation front, CEA Nageswaran highlighted that the price pressures have softened significantly. Headline CPI inflation declined from 6.7 per cent in FY23 to 5.4 per cent in FY24, easing further to 4.7 per cent in FY25, and dropping to 1.7 per cent in FY26 (up to December). Core inflation (excluding gold and silver) also moderated, falling from 6.1% in FY23 to 3.0% in FY25, before edging up to 2.9 per cent in FY26 (up to December).
The CEA further highlighted a steady reduction in the fiscal deficit as a share of GDP over the past few years.
After peaking at 9.2% in FY21, the fiscal deficit declined to 6.7% in FY22, 6.5% in FY23, and 5.5% in FY24. It is estimated at 4.8% in FY25 (RE) and budgeted to further narrow to 4.4% in FY26 (BE). The primary deficit has also shown a consistent decline, reflecting improved fiscal discipline, he said.
"Revenue performance has strengthened, supported by sustained buoyancy and a broadening of the direct tax base. Gross tax revenue increased from an average of 10.8% of GDP during FY16-FY20 to 11.5% in the post-pandemic period (FY22-FY25). Personal income tax collections rose significantly from 2.4% of GDP in the pre-pandemic years to 3.3% of GDP post-pandemic," the CEA said.
The widening of the tax base has been notable, with the number of income tax payers increasing from 6.9 crore in FY22 to 9.2 crore in FY25, reflecting improved compliance and formalisation of the economy.
On the expenditure side, the quality of government spending has improved, with a strong push towards capital expenditure. Effective capital expenditure rose from 2.7% of GDP in the pre-pandemic period to 3.9% of GDP post-pandemic, underscoring the government's focus on growth-supportive spending.