India to take steps to achieve 6.5%-7% GDP growth target
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FILE PHOTO: Labourers work at a construction site of the Ahmedabad-Mumbai High Speed Rail corridor in Ahmedabad, India, May 31, 2023. REUTERS/Amit Dave/File Photo
(Reuters) -The Indian government is taking steps to achieve its economic growth target of 6.5%-7% this fiscal year, the economic affairs secretary said on Monday, after slower-than-expected growth from July to September.
India's economic growth slowed more than expected in the second quarter of the financial year, hampered by weaker expansion in manufacturing and consumption, adding pressure on the central bank to cut rates.
The government expects growth to accelerate in the second half of the year, Ajay Seth said.
It has put in place an "investor friendly policy" to attract investors while simplifying tax rules, Pankaj Chaudhary, India's junior finance minister, told lawmakers separately on Monday.
Prime Minister Narendra Modi, after electoral wins last month in the state assembly elections of Maharashtra and Haryana, is expected to boost spending on infrastructure projects as part of the $576 billion budget plan announced in July.
India also plans measures including an increase in incentives to electric vehicle automakers to boost domestic manufacturing and amend insurance laws to raise the foreign direct investment (FDI) limit to 100% from 74%.
Analysts said that an increase in government spending in the second half of the fiscal year ending in March 2025, should boost growth.
"The quarter ending December is likely to benefit from a rise in government expenditure over the last few weeks," said Pranjul Bhandari, chief economist at HSBC Research.
Bhandari added that a sharp rise in services and goods exports in October was likely to gain momentum, as inventories are stocked up globally in anticipation of higher trade tariffs in 2025.
(Reporting by Nikunj Ohri; Writing by Manoj Kumar; editing by Barbara Lewis and Bernadette Baum)
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