NEW DELHI: The much-touted claims of higher GDP growth appear to be losing steam, with India’s economic growth rate projected to hit a four-year low of 6.4 per cent in 2024-25, according to government data released on Tuesday.
The slowdown is attributed to weaker performance in the manufacturing and services sectors. This marks the lowest growth rate since the Covid-hit fiscal of 2020-21, when the economy contracted by 5.8 per cent. India recorded GDP growth of 9.7 per cent in 2021-22, 7 per cent in 2022-23, and 8.2 per cent in the fiscal ending March 2024.
The National Statistics Office (NSO), in its first advance estimates for 2024-25, pegged growth at 6.4 per cent—lower than the Reserve Bank of India’s December 2024 projection of 6.6 per cent and the Finance Ministry’s earlier forecast of 6.5-7 per cent.
Sectoral slowdown
The manufacturing sector is expected to decelerate significantly, with output growth estimated at 5.3 per cent compared with 9.9 per cent in the previous fiscal.
The services sector, which includes trade, hotels, transport, and communication, is projected to grow at 5.8 per cent, down from 6.4 per cent in 2023-24. In contrast, the agricultural sector is forecast to show a robust recovery, with growth rising to 3.8 per cent in 2024-25 from 1.4 per cent in the prior year.
Budget implications
These advance estimates will serve as the foundation for the Union Budget, set to be presented by Finance Minister Nirmala Sitharaman on February 1.
Real GDP is projected to grow by 6.4 per cent in 2024-25, down from 8.2 per cent in the provisional estimates for 2023-24. Nominal GDP (current prices) is estimated to rise by 9.7 per cent to Rs324.11 lakh crore from Rs295.36 lakh crore in 2023-24, indicating an economic size of $3.8 trillion (based on Rs85.7/dollar).
The Gross Value Added (GVA) at current prices is estimated to grow by 9.3 per cent, reaching Rs292.64 lakh crore.
Consumption and expenditure
Private Final Consumption Expenditure (PFCE) at constant prices is projected to grow by 7.3 per cent in 2024-25, a notable improvement from 4 per cent in the previous year. Government Final Consumption Expenditure (GFCE) is also set to rebound, with growth accelerating to 4.1 per cent from 2.5 per cent.
The slowing economic momentum underscores the challenges ahead for maintaining high growth levels, especially amidst global uncertainties and domestic sectoral weaknesses.
