India's economic growth rate is estimated to slip to a four-year low of 6.4 per cent in 2024-25, mainly due to poor performance in the manufacturing and services sectors, 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 year ending March 2024.
The first advance estimates of National Income for 2024-25, released by the National Statistics Office (NSO), are lower than the 6.6 per cent projected by the Reserve Bank in December 2024. They are also slightly lower than the finance ministry's initial projection of 6.5-7 per cent.
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The advance estimates will be used in preparation for the Union Budget, which will be presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on 1 February.
Economic growth slowed to a seven-quarter low of 5.4 per cent during the July-September period, compared to 6.7 per cent in the first quarter (April-June).
The manufacturing sector's output is expected to decelerate to 5.3 per cent from a high of 9.9 per cent recorded in the previous fiscal, the NSO said.
The services sector, comprising trade, hotels, transport, and communications, is estimated to expand at 5.8 per cent, down from 6.4 per cent in 2023-24.
On the other hand, the agricultural 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, compared to the growth rate of 8.2 per cent in the Provisional Estimate (PE) of GDP for FY 2023-24," the NSO said.
Nominal GDP is likely to grow at 9.7 per cent in 2024-25, compared to 9.6 per cent in 2023-24.
According to the data, nominal GDP (GDP at current prices) is estimated to reach ₹324.11 lakh crore in 2024-25, compared to ₹295.36 lakh crore in 2023-24, showing a growth rate of 9.7 per cent.
The size of the economy, according to current estimates, is USD 3.8 trillion (@₹85.7/USD) during 2024-25.
Aditi Nayar, Chief Economist at ICRA, opined that while the NSO's implicit H2 FY2025 projections seem reasonable, some of the sectoral numbers could report higher growth figures.
"In our view, GDP growth in FY2026 will be crucially influenced by global uncertainties as well as domestic uncertainties, amidst considerable base effects. Benefiting from an anticipated capex push in the upcoming Budget, we project GDP growth at 6.5 per cent in FY2026," she said.
Dharmakirti Joshi, Chief Economist at 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.
"The urban economy is grappling with the dual challenge of high inflation and slowing credit growth. The Reserve Bank of India's recent data indicates that consumer confidence has moderated in urban areas, and growth in retail credit, which has a larger footprint in the urban economy, has slowed," he said.
Further, according to the NSO, nominal Gross Value Added (GVA) is estimated to reach ₹292.64 lakh crore in 2024-25, compared to ₹267.62 lakh crore in 2023-24, showing a growth rate of 9.3 per cent.
Private Final Consumption Expenditure (PFCE) at constant prices has witnessed a growth rate of 7.3 per cent during 2024-25, compared to a growth rate of 4 per cent in the previous financial year.
Government Final Consumption Expenditure (GFCE) at constant prices has rebounded to a growth rate of 4.1 per cent, compared to a growth rate of 2.5 per cent in the previous fiscal.
The NSO also said that per capita income (at current prices) is estimated to increase by 8.7 per cent to ₹2,00,162 per annum, up from ₹1,84,205 in the preceding fiscal.
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