India’s economic growth rate is estimated to slip to a four-year low of 6.4 per cent in 2024-25, mainly on account of poor showing by the manufacturing and services sector, according to government data released on Tuesday.
The gross domestic product (GDP) rate of 6.4 per cent will be the lowest since the Covid year (2020-21) when the country witnessed a negative growth of 5.8 per cent. It was 9.7 per cent in 2021-22; 7 per cent in 2022-23; and 8.2 per cent in the last fiscal ended March 2024.
The first advance estimates of National Income for 2024-25 released by the National Statistics Office (NSO) is lower than the 6.6 per cent projected by the Reserve Bank in December 2024. It is also a tad lower than the finance ministry’s initial projection of 6.5-7 per cent.
The advance estimates will be used in preparation for the Union Budget to be presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on February 1.
The economic growth slowed to a seven-quarter low of 5.4 per cent during the July-September period. It was 6.7 per cent in the first quarter (April-June).
The manufacturing sector output is expected to decelerate to 5.3 per cent from a high of 9.9 per cent recorded in the previous fiscal, NSO said.
The services sector, comprising trade, hotels, transport and communications, is estimated to expand at 5.8 per cent against 6.4 per cent in 2023-24.
On the other hand, the farm sector is estimated to record a growth of 3.8 per cent in the current fiscal, up from 1.4 per cent in 2023-24.
“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,” NSO said.
Nominal GDP is likely to grow at 9.7 per cent in 2024-25 against 9.6 per cent in 2023-24.
According to the data, nominal GDP (GDP at current prices) is estimated to attain a level of Rs 324.11 lakh crore in 2024-25 compared to Rs 295.36 lakh crore in 2023-24, showing a growth rate of 9.7 per cent.
The size of the economy, as per the current estimates, is USD 3.8 trillion (@Rs 85.7/USD) during 2024-25.
Aditi Nayar, Chief Economist, Icra opined that while the NSO’s implicit H2 FY2025 projections seem reasonable, some of the sectoral numbers could report higher growth prints.
“In our view, the GDP growth in FY2026 will be crucially influenced by global uncertainties as well as domestic uncertainties, amidst considerable base effects. Benefitting from an anticipated capex push in the upcoming Budget, we project the GDP growth at 6.5 per cent in FY2026,” she said.
Dharmakirti Joshi, Chief Economist, Crisil, said the decline in government capital expenditure, a key driver of post-pandemic recovery, during the second quarter is unlikely to be compensated for in the rest of the fiscal.
