The country's GDP figure will not increase even in the next 2 years, the government will have to take strict steps

New Delhi : EY India has recently released a report regarding India's GDP. On the basis of this report, it has been revealed that India's GDP is expected to remain stable at 6.5 percent in FY 2025 and FY 2026. The report highlights key fiscal and economic measures that can sustain and boost this growth circle.

The report said that in the medium term, India's real GDP growth prospects could be kept at 6.5 per cent per annum, provided the Indian government accelerates the increase in its capital expenditure in the remainder of the current fiscal year and Come up with a medium-term investment pipeline with the participation of the Government of India and State Governments.

limited to 30 percent of GDP

An important recommendation of the report is that the combined debt of the central and state governments should not exceed 60 percent of the country's nominal GDP. This limit would require each level of government to limit its debt to 30 percent of GDP. It said that the combined debt-to-GDP ratio target should be maintained at 60 per cent, but it should be divided equally between the Government of India and the states at 30-30 per cent. The report also emphasizes the importance of balancing current income and expenditure at both the central and state levels to improve national savings.

national saving rate

Realistically, achieving a national savings rate of 36.5 per cent of GDP along with an additional contribution of 2 per cent from foreign investment could increase the total investment level to 38.5 per cent.

call for reforms

This level of investment is expected to support a stable economic growth rate of 7 percent per annum. The report also calls for significant reforms in the Fiscal Responsibility and Budget Management (FRBM) Act to ensure fiscal discipline while supporting India's growth ambitions.

resource free

A key recommendation is to make balancing the revenue account a priority for both the central and state governments. This would drain government savings and free up resources for productive investments needed for sustainable development. In this, a fiscal deficit target of 3 percent of GDP has been proposed for both the central and state governments. However, the central government should maintain flexibility by allowing the fiscal deficit to be kept between 1 per cent and 5 per cent of GDP to deal with unexpected challenges such as economic slowdown.

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The report highlights the importance of balanced fiscal policies and strong investment from households, businesses and the public sector. With these measures in place, India is well positioned to achieve long-term growth and economic stability.