India’s ‘Viksit Bharat’ Progress Potentially Shaped By Higher Capex, Concentration on Rare Earth Minerals: According to EY Report
India’s Viksit Bharat Initiative Influenced by Increased Investments in Rare Earth Minerals
According to a report by EY, enhancing capital expenditure and concentrating on rare earth minerals could significantly influence India’s journey towards achieving Viksit Bharat. The report emphasizes the need for policy actions that strike a balance between supporting consumption and elevating capital spending.
Furthermore, it asserts that India’s long-term growth is contingent upon enhancing resilience through self-sufficiency in critical minerals—resources essential for economic progression and national security. In June 2023, India identified a minimum of 30 critical minerals necessary for various sectors, including defence, agriculture, energy, pharmaceuticals, and telecommunications.
To this end, India initiated a National Critical Mineral Mission set for 2025, aimed at addressing the challenges associated with these resources. EY highlights that continued backing from both public and private sectors will be crucial. Additionally, forging stronger partnerships with nations abundant in rare earth minerals may mitigate supply chain vulnerabilities.
According to the May edition of the EY Economy Watch, India’s economic expansion is expected to slow down for the fiscal year 2025-26 due to a combination of global challenges and domestic factors. Nonetheless, the report maintains that India continues to be one of the fastest-growing large economies, buoyed by robust domestic demand, declining inflation rates, and a favorable monetary policy that encourages private investment.
The analysis from EY indicates that global dynamics are contributing to a more cautious economic outlook. Factors such as ongoing disruptions in supply chains, the effects of recent U.S. tariff policies, and broader uncertainties in international trade and geopolitical tensions are vital to consider. The EY report suggests that, in the immediate term, India might need a careful blend of monetary and fiscal strategies to maintain growth momentum. From a monetary policy perspective, continuing the current cycle of interest rate reductions could bolster both consumption and investment.
On the fiscal side, reviving the pace of public investments, particularly in government capital expenditures—which saw a slowdown in growth during 2024-25—will be essential for sustaining economic activity. DK Srivastava, Chief Policy Advisor at EY India, remarked, “While India’s medium-term outlook remains robust, prevailing global headwinds and domestic hurdles necessitate supportive fiscal and monetary measures. In the long run, sectors associated with technology and clean energy will be pivotal in fostering sustainable growth. Establishing resilience through self-reliance in critical minerals, especially rare earth elements, can help India realize its Viksit Bharat vision.”
