Sun Mar 30 07:44:23 UTC 2025: ## India’s Economy Projected to Grow at 6.5% in FY25, but Investment in Human Capital Crucial for Long-Term Growth: EY
**New Delhi, [Date]** – EY India’s Economy Watch projects India’s real GDP growth to reach 6.5% in the fiscal year 2025 (FY25), following a projected 6.4% growth in FY24. However, the report emphasizes the critical need for strategic fiscal policy adjustments to ensure sustainable long-term growth and achieve the “Viksit Bharat” (developed India) goal.
The report highlights that achieving the projected 6.5% growth in FY25 requires substantial increases in private consumption expenditure or government investment, particularly in capital expenditure. The report cautions that achieving the required growth rate in the final quarter of FY25 presents a significant challenge.
Looking ahead, EY projects that India needs significant increases in spending on education and healthcare to maintain long-term growth and improve human capital. The report suggests that government spending on education should rise to 6.5% of GDP by FY2048 (from the current 4.6%) and health expenditure should increase to 3.8% of GDP (from 1.1% in 2021). This would necessitate raising the revenue-to-GDP ratio from 21% to 29% over time.
The report further stresses the importance of equalization transfers to low-income states with larger young populations, ensuring equitable access to education and healthcare. A phased approach to fiscal restructuring is recommended to achieve these goals without hindering economic growth.
DK Srivastava, Chief Policy Advisor at EY India, noted the potential for India’s changing demographics to fuel economic growth if effectively managed. He highlighted the need to increase the revenue-to-GDP ratio and strategically allocate government spending toward health, education, and infrastructure. The report concludes that a balanced fiscal strategy focused on human capital development is key to maximizing India’s long-term growth potential.
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