Data Alert
First advance estimate pegs FY25 GDP growth at 6.4% vs 8.2% FY24
This story was originally published at 17:05 IST on 7 January 2025
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--Govt: FY25 GDP growth seen at 6.4% as per first advance estimate
--Informist poll estimated India FY25 GDP growth at 6.4%
--Govt: FY25 GDP growth seen at 6.4% vs 8.2% FY24
--Govt: FY25 GVA growth seen at 6.4% vs 7.2% FY24
--Govt: FY25 nominal GDP growth seen at 9.7% vs 9.6% FY24
--Govt: FY25 agriculture sector growth seen at 3.8% vs 1.4% FY24
--Govt: FY25 mining sector growth seen at 2.9% vs 7.1% FY24
--Govt: FY25 manufacturing sector growth seen at 5.3% vs 9.9% FY24
--Govt: FY25 manufacturing sector growth seen at 5.3% vs 9.9% FY24
--Govt: FY25 construction sector growth seen at 8.6% vs 9.9% FY24
--Govt: FY25 services growth seen at 7.2% vs 7.6% FY24
--FY25 GDP growth estimate of 6.4% lowest in 4 years
--Govt: FY25 industry growth seen at 6.2% vs 9.5% FY24
--Govt: FY25 private consumption growth seen at 7.3% vs 4.0% FY24
--Govt: FY25 gross fixed capital formation growth seen at 6.4% vs 9.0% FY24
--Govt: FY25 govt consumption expenditure growth seen at 4.1% vs 2.5% FY24
NEW DELHI – India's GDP growth is estimated to moderate to a four-year low of 6.4% in the current financial year ending March, according to the first advance estimate released by the statistics ministry Tuesday. The Indian economy has grown by at least 7% in each of the last three financial years after shrinking 5.8% in 2020-21 (Apr-Mar). In FY24, GDP growth beat all forecasts to come in at 8.2%.
The first advance estimate of 6.4% is in line with the consensus expectation of GDP growth in FY25. According to an Informist poll of economists, GDP growth was seen at 6.4% in FY25. The first advance estimate is, however, lower than the Reserve Bank of India's projection of 6.6% GDP growth for FY25 and the finance ministry's estimate of 6.5%.
The gross value-added growth, which economists consider a more reliable indicator of economic activity than GDP, is also seen slowing down to a four-year low of 6.4% in FY25 from 7.2% in FY24.
The slowdown in GDP growth in FY25 is mainly because of weaker industrial activity, particularly in the mining and manufacturing sectors. Industry is estimated to grow 6.2% this year as compared to a 9.5% growth in FY24. The services sector is also seen growing slower this fiscal at 7.2%, against 7.6% in FY24, while agriculture is estimated to grow at 3.8% in FY25, higher than 1.4% last fiscal.
Within industry, the manufacturing sector is seen growing 5.3% in FY25, while mining sector growth is seen at just 2.9%. In FY24, the manufacturing and mining sectors expanded at 9.9% and 7.1%, respectively.
On the demand side, private consumption is seen as the top performer this year, while capital formation and government expenditure are seen lagging. Private consumption is estimated to grow at a three-year high of 7.3% in FY25 against 4.0% last fiscal, while capital formation growth is seen slowing down to 6.4% from 9.0% in FY24. Government consumption is estimated to grow the slowest in FY25, at 4.1%, even as the growth is seen improving from 2.5% in FY24.
The first advance estimate is a key number for the government as it forms the basis for its FY26 Budget numbers. The finance ministry will use the first advance estimate of FY25 GDP in current prices to assume a certain nominal GDP growth for FY26, which will then form the basis for the various Budget numbers for next year, including the fiscal deficit target and growth in tax collections. Finance Minister Nirmala Sitharaman will present the Union Budget on Feb. 1.
According to the second advance estimate, nominal GDP growth is seen at a four-year low of 9.7% in FY25 against 9.6% last fiscal. The finance ministry had assumed a nominal GDP growth of 10.5% in the Union Budget for FY25 presented in July.
A nominal GDP growth of 9.7% would reduce the amount of fiscal room available to the Indian government, taking the fiscal deficit to 5.0% from the budgeted 4.9%, assuming the government meets the absolute fiscal deficit target set in the Budget.
The following table gives growth (in percentage) in GVA and its components and GDP for FY25 and FY24:
| 2024-25 | 2023-24 | |
| Agriculture | 3.8% | 1.4% |
| Industry | 6.2% | 9.5% |
| Mining | 2.9% | 7.1% |
| Manufacturing | 5.3% | 9.9% |
| Electricity, gas | 6.8% | 7.5% |
| Construction | 8.6% | 9.9% |
| Services | 7.2% | 7.6% |
| Trade, hotels | 5.8% | 6.4% |
| Financial services | 7.3% | 8.4% |
| Other services | 9.1% | 7.8% |
| GVA | 6.4% | 7.2% |
| GDP | 6.4% | 8.2% |
The following table details the annual GDP growth (in %) in recent years as per the new series:
|
YEAR |
GROWTH RATE |
| 2024-25 | 6.4% |
|
2023-24 |
8.2% |
|
2022-23 |
7.0% |
|
2021-22 |
9.7% |
|
2020-21 |
(-)5.8% |
|
2019-20 |
3.9% |
|
2018-19 |
6.5% |
|
2017-18 |
6.8% |
|
2016-17 |
8.3% |
|
2015-16 |
8.0% |
|
2014-15 |
7.4% |
|
2013-14 |
6.4% |
|
2012-13 |
5.5% |
End
Reported by Shubham Rana
Edited by Tanima Banerjee
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