The Indian government's gross domestic product (GDP) growth estimate of 8-8.5 percent for the current fiscal year appears overly optimistic, says former Finance Minister Palaniappan Chidambaram, adding that the International Monetary Fund's (IMF) projection of 7.5 percent is more realistic.
"7.5 percent is achievable; it could be a few basis points above 7.5 percent, closer to 8 percent. But I can't see how it can be more than 8 percent. In fact, I would caution them not to attempt anything more than 8 percent, because that becomes a bit inflationary," Chidambaram, who most recently served as Finance Minister from 2012–2014, told CNBC.
An estimate of 7.5 percent, if borne out, would put India's economic growth rate ahead of economic rival China. The world's second largest economy is forecast to expand around 7 percent this year.
Important to note, however, is that the jump in India's growth rate is largely attributable to the government's new methodology for calculating GDP, say economists.