India’s economy is projected to slow down in the fiscal year 2024-25, with real GDP growth estimated at 6.4%, significantly lower than 2023-24’s 8.2%. This marks the slowest growth rate since the pandemic, when India’s GDP contracted by 5.8% in FY 2020-21. According to the government’s latest data, the Real GDP is expected to reach ₹184.88 lakh crore in 2024-25, compared to ₹173.82 lakh crore in the previous fiscal year, reflecting a tempered economic outlook.
Key Highlights:
- Growth Rate Slowdown: India’s estimated 6.4% growth is the lowest since the pandemic period. In 2024-25, Real Gross Value Added (GVA) is also expected to decelerate, forecasted at 6.4%, down from 7.2% in the previous year.
- Sectoral Performance:
- Agriculture and Allied Sectors: This sector is expected to see growth at 3.8%, which is a significant improvement from 1.4% in the previous year, reflecting better performance in agriculture.
- Mining and Manufacturing: The mining and quarrying sector experienced a sharp decline in growth, from 6.3% in 2023-24 to just 2.6% in 2024-25. Similarly, manufacturing growth slowed to 6.6% from 8% earlier.
- Tertiary Sector Growth: This sector is showing strong performance, particularly in services such as trade, hotels, and transport. Services like financial, real estate, and professional services are projected to grow at 10.3%, up from 9.9% last year.
- Nominal GDP and GVA: While real GDP growth is slowing, nominal GDP and GVA are estimated to rise, with nominal GDP growing at 9.7%, slightly higher than last year’s 9.6%. Similarly, Nominal GVA growth is projected to rise to 9.3% from 8.5% in 2023-24.
The slowdown in growth is attributed to several macroeconomic factors, including global economic uncertainties, inflationary pressures, and a decrease in investment activity. However, the robust performance in the tertiary sector, particularly in services, provides a silver lining. The government’s targeted focus on agriculture and real estate sectors may also help mitigate the slowdown’s impact.
Despite the slowdown in India’s economic growth, the country is on track to achieve a nominal GDP growth of 9.7% in FY 2024-25. While challenges persist, the sustained growth in services and agriculture offers hope for resilience in the country’s economic outlook. India’s path to becoming a $5 trillion economy remains intact, even if the pace of growth moderates in the short term.
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