Key Points
- Growth Forecast: India’s GDP growth rate is estimated at 6.4% for FY 2024-25, marking the slowest growth since the pandemic-hit FY 2020-21.
- Decline in Sectors: Manufacturing growth is projected at 5.3%, down from 9.9% last year, while the service sector’s growth rate may drop to 5.8% from 6.4%.
- Agriculture Brings Hope: Agriculture is expected to grow at 3.8%, a significant recovery from 1.4% in FY 2023-24.
- Comparison with Previous Years: GDP growth in FY 2023-24 stood at 8.2%, while earlier years saw 9.7% (2021-22) and 7% (2022-23).
- Policy Implications: The data will influence the Union Budget 2025, set to be presented on February 1, by Finance Minister Nirmala Sitharaman.
New Delhi : India’s economy is expected to grow at 6.4% in FY 2024-25, as per the National Statistical Office (NSO), marking a sharp decline from 8.2% growth in FY 2023-24. The slowdown is attributed to a lackluster performance in the manufacturing and service sectors. The NSO released this estimate in its first advance report on national income, providing a critical benchmark for the upcoming Union Budget 2025.
This projection is lower than earlier estimates by the Reserve Bank of India (RBI), which pegged growth at 6.6%, and the Finance Ministry, which anticipated growth in the range of 6.5–7%.
Sectoral Analysis
Manufacturing and Services Take a Hit
- Manufacturing: Growth in the manufacturing sector is estimated at 5.3%, significantly down from the robust 9.9% seen in FY 2023-24.
- Services: Key areas such as trade, hotels, transport, and communication are projected to grow by only 5.8%, compared to 6.4% in the previous year.
Agriculture Shows Resilience
The agriculture sector is forecasted to grow at 3.8%, a notable improvement from the modest 1.4% growth recorded last year, offering some relief amid the overall slowdown.
Economic Milestones and Trends
GDP Trends at Current and Constant Prices
- At Current Prices: GDP is projected to grow by 9.7%, increasing from ₹295.36 lakh crore in FY 2023-24 to ₹324.11 lakh crore in FY 2024-25.
- At Constant Prices: GDP growth is expected to decelerate from 8.2% to 6.4%, marking the slowest expansion since the pandemic-induced contraction of -5.8% in FY 2020-21.
Economic Size
India’s economy is estimated to reach a size of $3.8 trillion in FY 2024-25, with an exchange rate of ₹85.7 per US dollar, highlighting steady expansion despite sectoral challenges.
Consumption and Value-Added Contributions
Gross Value Added (GVA)
- GVA Growth: Estimated at 9.3%, increasing from ₹267.62 lakh crore in FY 2023-24 to ₹292.64 lakh crore in FY 2024-25.
Consumption Patterns
- Private Consumption: Expected to grow by 7.3%, a significant rise from 4% in the previous year.
- Government Spending: Projected to grow by 4.1%, up from 2.5%, reflecting enhanced fiscal activity.
Implications for the Union Budget
The advance estimates serve as a foundation for the Union Budget to be presented by Finance Minister Nirmala Sitharaman on February 1. Policymakers face the challenge of balancing fiscal priorities to address sectoral slowdowns while maintaining the economy’s long-term growth trajectory.
With global economic uncertainties and domestic challenges in key sectors, the focus will likely be on stimulating investments, fostering consumption, and supporting high-growth industries.
India’s projected GDP growth of 6.4% for FY 2024-25 underscores the need for focused policy measures to address the slowdown in manufacturing and services. While agriculture and consumption provide some optimism, the government must craft strategic interventions in the upcoming Union Budget to sustain economic momentum and counteract sectoral sluggishness.
