India’s GDP likely to grow 6.4% in 2024-25, show first advance estimates

The gross domestic product (GDP) estimates for financial year 2024-25 (FY25) have been maintained at 6.4 per cent, the Ministry of Statistics said on Tuesday. This is significantly lower than the 8.2 per cent GDP growth witnessed in the previous financial year 2023-24.

Despite a dull first half of FY25, the ministry expected an uptick in agricultural and industrial activity, along with resilient rural demand in the second half to keep India on a growth path towards achieving 6.4-6.8 per cent expansion by the end of the financial year.

“Real GDP has been estimated to grow by 6.4 per cent in FY 2024-25 as compared to the growth rate of 8.2 per cent in Provisional Estimate (PE) of GDP for FY 2023-24. Nominal GDP has witnessed a growth rate of 9.7 per cent in FY 2024-25 over the growth rate of 9.6 per cent in FY 2023-24,” Ministry of Statistics and Programme Implementation said in its official release.

Improvement in agriculture

The agriculture and allied sector has shown a significant improvement, with Real GVA growth estimated at 3.8 per cent in FY25, a marked increase from the previous year’s 1.4 per cent.

Construction and service sectors

The construction sector and the financial, real estate and professional services sector are also expected to experience strong growth. The construction sector’s Real GVA is projected to rise by 8.6 per cent.

Similarly, the financial, real estate and professional services sector is expected to grow by 7.3 per cent, indicating a strong performance in finance, real estate development, and business services.

Growth in private consumption

Turning to expenditure patterns, Private Final Consumption Expenditure (PFCE) at constant prices has experienced a growth of 7.3 per cent in FY25, a significant increase compared to the 4 per cent growth in the previous year.

PFCE is a key indicator of domestic consumption, reflecting the spending behavior of households, and this growth highlights an improvement in consumer confidence, spending power, and overall economic recovery.

Govt expenditure up

Similarly, government final consumption expenditure (GFCE), which refers to government spending on goods and services, has rebounded strongly with a growth rate of 4.1 per cent in FY25, up from 2.5 per cent in the previous financial year.

Previous FY25 growth projections

The real GDP growth rate for the last financial year, FY24, was 8.2 per cent. The Economic Survey report, released in July 2024, projected a growth of 6.5 to 7 per cent for the financial year ending March 2025. In its November review, the finance ministry revised its GDP projections to around 6.5 per cent, flagging the Reserve Bank of India’s monetary policy stance among the reasons for the slowdown in H1 of FY25.

RBI revises GDP projections

In its last monetary policy committee meeting, the Reserve Bank significantly lowered its growth projection for FY25 to 6.6 per cent from an earlier estimate of 7.2 per cent. The new estimates came after India’s GDP for the second quarter (Q2) fell to a seven-quarter low of 5.4 per cent against its own projection of 7 per cent. It also marked the third consecutive quarter of slower growth in India. Furthermore, at 5.8 per cent, inflation in November 2024 was over the RBI’s target of 4 per cent.

The central bank, however, contended that rural consumption, government expenditure, investment, and strong services exports would lead to a pickup in GDP in the third and fourth quarters of this financial year.

Quarter-wise GDP projections of the RBI were:

Q1 FY25: 6.9 per cent

Q2 FY25: 7.3 per cent

Q3 FY25: 6.8 per cent (estimates)

Q4 FY25: 7.2 per cent (estimates)

This announcement comes three weeks ahead of the central government’s release of the Union Budget for 2025-26.

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