JPMorgan's Jahangir Aziz states that India is facing challenges in identifying new drivers for economic growth.

• JPMorgan's Jahangir Aziz stated that India faces challenges in determining new drivers for its economic growth, despite its economy expanding rapidly, as per the union budget.
• The Reserve Bank of India's growth forecast for financial year 2025 is higher than India's chief economic advisor V Anantha Nageswaran's prediction of 6.5% to 7% growth.

JPMorgan's Jahangir Aziz stated that India faces challenges in determining new drivers for its economic growth, despite its economy expanding at a rapid pace, as per the union budget.

According to Aziz, the chief emerging markets economist at JPM, the growth in India over the past two years since the pandemic has been strong. However, the driving forces behind this growth are mainly public infrastructure and services export.

The finance minister of the country announced on Tuesday that the capital expenditure for fiscal year 2025 will be 11.11 trillion Indian rupees ($133.9 billion), which is 3.4% of GDP. This allocation supports India's goal of improving its physical and digital infrastructure as it works towards becoming a developed nation by 2047.

India's services exports are expected to reach $30.3 billion in June, up from $27.8 billion in the same month last year, according to estimates by the Ministry of Commerce and Industry.

Aziz stated that services export has stabilized at a high level but is not growing as quickly as it did a couple of years ago. He suggested that the government should prioritize increasing private investments and increasing consumption to boost the economy.

"Can India sustain its growth rate of 6% to 7% through public infrastructure and services exports alone? The challenge lies in expanding growth drivers to consumption and private investment, which has not been observed in a long time."

The Reserve Bank of India's growth forecast for financial year 2025 is higher than India's chief economic advisor V Anantha Nageswaran's prediction of 6.5% to 7% growth.

The International Monetary Fund predicts that the country's growth rate will decrease to 6.5% in 2025, as stated in their latest World Economic Outlook.

Raghuram Rajan, a professor at the University of Chicago Booth School and former governor of the Reserve Bank of India, warned that India's large youth population may not drive the country to become the world's third largest consumer market by 2027 if high unemployment hinders consumption growth.

In June, the unemployment rate in India increased to 9.2% from 7% in May, as per the Centre for Monitoring Indian Economy.

Rajan stated that consumption growth has been sluggish in recent quarters, and unless individuals feel more secure about their well-paying jobs, this will hinder growth.

The employment initiatives, including the commitment to train 2 million young people over five years and offer a month's worth of wages of approximately 15,000 rupees ($179) to first-time employees entering the workforce, were questioned in Tuesday's budget.

"Does India's joblessness necessitate such a large scale?"