Chief Economic Advisor of Anantha Negeswaran | Photocredit: Ani/Sanjay Sharma
Given the expectation of benign inflation, there may be a shortage in the nominal GDP growth in comparison with the estimate of the budget of 10.1 percent for the current financial year, said Chief Economic Adviser of Anantha Negeswaran.
He expressed optimism about achieving the real GDP growth target of 6.3-6.8 percent for the current tax year, despite the fact that the US imposed a steep rate of 50 percent on Indian shipments.
The nominal GDP includes changes in prices caused by inflation, which reflects the impact of rising general price levels, while the real GDP is an inflation-corrected measure that evaluates the value of all goods and services produced in a country in a country for a country.
Inflation is expected to be low due to an estimated good Kharif harvest and a reduction in the prices of around 400 items after Historical GST reforms have recently been approved by the GST Council led by Minister of Finance Nirmala Sitharaman.
“There may be a shortage of nominal GDP growth. I think there is a greater chance that that will happen to me, however, is that the nominal GDP growth with 8.8 percent for the first quarter was better than what many had feared that it would be between 8 and 8.5 percent,” he told pti.
“So I think that if the effects of the GST exemption and the higher disposable income that comes from lower inflation, of the direct tax reduction that is granted in the budget of February, because they all come into effect and the domestic and domestic consumption will generally stimulate, but the overall inflation will remain.” The nominal GDP growth may not be too far short of the supposed number in the budget of approximately 10.1 percent for the full financial year FY26, he added.
About the impact of GST reforms on GDP, Nageswaran said: “Although it will be difficult to quantify it at the moment, a lot will ultimately depend on how consumers react and whether this will be compensated by any uncertainty with regard to external trade, etc.” But given that this is a fairly radical overhaul of the GST structure itself, which reduces four rates to two and also many other process simplations, he said that the impact on the economy will be fairly substantial, not only in terms of affairs to consumers (B2C), but also in terms of business activities (B2B) transactions.
PIN hopes for the underlying resilience of the Indian economy, Naigeswaran said that the high growth momentum that will be shown in the first quarter of the current tax is expected to continue in the coming quarter, with a downward distortion of high American rates.
The Indian economy reported a stronger than expected growth of 7.8 percent in April-June, the fastest pace in five quarters.
“I think the first quarter for the financial year was certainly better than expected. Many people did the fact that the BBP defator was much weaker this year compared to last year; in a certain sense, the BBP defator was a good thing and was not an unknown aspect.
“Yet the GDP growth -number of number in the current financial year was much better than expected, it testifies to the underlying resilience of the Indian economy in general and the lagging effects of various initiatives that the government has taken since the beginning in 2014 and in the last two budgets his momentum,” said Napar, “said.
Further elaboration, he said that the trade impasse will continue with the US at the moment, so there will be some impact in the second quarter, because raised rates for Indian shipments came into force in August.
A steep American rate of 50 percent on goods from India came into force on 27 August. The rates, one of the highest in the world, include a fine of 25 percent for buying crude oil from Russia. On August 7, the Trump government enforced a rate of 25 percent on Indian goods, referring to the persistent oil import from India from Russia and long-term trade barriers.
Published on September 7, 2025
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