India’s GDP Growth Projected at 6.4% for FY25, Marking 4-Year Low

India’s Gross Domestic Product (GDP) is projected to grow at 6.4% in the fiscal year 2024-25, according to the first advance estimates released by the government on Tuesday. This represents a significant slowdown, marking a 4-year low and a sharp decline from the 8.2% growth recorded in FY24.

Decline from Previous Estimates

The projected GDP growth of 6.4% for FY2024-25 is lower than the Reserve Bank of India’s (RBI) estimate of 6.6% for the same period, highlighting a moderation in economic activity. The National Statistical Office (NSO), which released the first advance estimates of national income, stated, “Real GDP has been estimated to grow by 6.4% in FY2024-25 compared to the 8.2% growth rate in the provisional estimate (PE) of GDP for FY2023-24.”

Growth in Real and Nominal Gross Value Added (GVA)

The data also revealed that real Gross Value Added (GVA) is expected to grow at 6.4% in FY25, down from 7.2% in FY24. In contrast, nominal GVA is projected to increase by 9.3% in FY25, slightly higher than the 8.5% growth in the previous fiscal year.

Economic Slowdown Reflected in Sectoral Growth

The advanced GDP estimates point to a slowdown in the broader economy, with the agriculture and allied sectors expected to grow by 3.8% in FY25, compared to 1.4% growth in FY24. The construction sector and the financial, real estate, and professional services sectors are projected to see growth rates of 8.6% and 7.3%, respectively, in FY25.

Private and Government Consumption Trends

Private Final Consumption Expenditure (PFCE), a key indicator of household spending, is projected to grow by 7.3% in FY25, a significant improvement over the 4.0% growth seen in the previous fiscal year. Similarly, Government Final Consumption Expenditure (GFCE) is estimated to grow by 4.1%, up from 2.5% in FY24, reflecting an uptick in government spending.

Impact of FY25 Q2 Slowdown

The economic outlook follows a surprising dip in growth during the July-September quarter of FY25, where GDP growth stood at just 5.4%. This unexpected slowdown prompted the RBI to revise its growth forecast for FY25, lowering it to 6.6% from an earlier projection of 7.2%.

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