India’s GDP growth estimated at 6.4% for FY25, Lowest in 4 Years

The Indian economy is projected to grow at 6.4% in 2024-25, significantly lower than the 8.2% growth recorded in the previous fiscal year, according to the first advance estimates released by the National Statistical Office (NSO) on Tuesday. This estimate, which serves as a crucial input for the Union Budget, is slightly below the Reserve Bank of India’s (RBI) revised projection of 6.6% for the current fiscal year ending March 2025. The NSO highlighted that the real GDP growth rate reflects a deceleration in economic momentum compared to the Provisional Estimate (PE) for FY24.
The data further revealed that real Gross Value Added (GVA) is expected to expand by 6.4% in FY25, down from 7.2% in FY24. In contrast, nominal GVA growth is forecasted to rise to 9.3%, marginally higher than the 8.5% recorded in the previous year. This divergence between real and nominal growth figures underscores persistent inflationary pressures in the economy, even as growth moderates.
The advance GDP estimate highlights a slowdown in economic activity, following a sharp dip during the July-September quarter of FY24, when growth dropped to 5.4%. This unexpected decline prompted the RBI to lower its FY24 GDP growth forecast from 7.2% to 6.6%. The slowdown reflects a combination of subdued global demand, elevated inflation, and challenges across key domestic sectors, signaling caution for the year ahead.
Sectoral data from the NSO provided mixed signals. Agriculture and allied activities are projected to grow by 3.8% in FY25, a marked improvement from the modest 1.4% growth witnessed in FY24. The construction sector is expected to remain a bright spot with an 8.6% growth projection, while financial, real estate, and professional services are estimated to grow by 7.3%. Private Final Consumption Expenditure (PFCE), a key indicator of consumer demand, is expected to grow by 7.3% in FY25, recovering from 4.0% in FY24. Similarly, Government Final Consumption Expenditure (GFCE) is projected to expand by 4.1%, up from 2.5% in the previous year, stated report.

(Business Correspondent)