Growth likely to have slowed in Q2, FY25 capex may undershoot Budget estimates: Economic Affairs Secretary Ajay Seth

India's economic growth may have slowed in the September quarter, but overall there is not much downside risk to 6.5-7 per cent growth projections for the current fiscal year, Economic Affairs Secretary Ajay Seth said on Wednesday. Seth said there may be some "undershooting" in the Rs 11.11 lakh crore capex target set for FY25, but the actual spending would be "significantly" higher than Rs 9.5 lakh crore made in FY24.

On inflation, he said food prices have been a concern area. But, other than that, inflation is not a challenge for India. Retail inflation had touched a 14-month high of 6.21 per cent in October with a spike in prices of food items.

"We started the year with estimates in the Economic Survey of 6.5-7 per cent growth. I don't see any significant downside risk to this... The numbers in the second quarter do indicate that some of the products or some of the services may not be at the same level where they were about a year back or even two quarters earlier," Seth said at a Ficci event here.

He, however, added that some other indicators, especially e-way bills or e-invoices in October, do not show any signs of slack in activity.

"That does not indicate that there is any significant possibility of any downside risk from 6.5-7 per cent goal that has been estimated at the beginning of the year," Seth said.

The Indian economy grew 6.7 per cent year-on-year in the April-June period of FY25. Although this marks the slowest growth in five quarters, India ranks among the fastest-growing major economies globally.

India grew at 8.2 per cent in the 2023-24 financial year.

On capex spending, Seth said while some sectors are a bit slow, additional demands coming up in a few others. Capex has been slow on account of national elections that took place in the first quarter of current fiscal.

In the first half (April-September) of FY25, the government has spent 37.3 per cent of its budgeted target of Rs 11.11 lakh crore, compared with 49 per cent of the previous year's target.

"This year capex was budgeted at Rs 11.11 lakh crore and there may be some undershooting, but I do expect that will be a significant increase over last year..."Even last year, it was budgeted for Rs 10 lakh crore, but expenditure was about 95 per cent. I see even this year we should be around the same percentage," Seth added.