India’s GDP growth is projected to decelerate sharply to 6.4% in FY25, a significant drop from the robust 8.2% recorded in FY24, according to the first advance estimates released by the National Statistics Office (NSO). This slowdown signals a more subdued pace of economic activity and sets the stage for the economy's slowest growth in four years.
The NSO data reveals that real GDP at constant prices is expected to rise to ₹184.88 lakh crore in FY25, compared to ₹173.82 lakh crore in FY24. Nominal GDP at current prices is projected to grow by 9.7%, reaching ₹324.11 lakh crore, slightly outpacing the previous year’s growth of 9.6%. However, these projections fall short of the Reserve Bank of India’s (RBI) revised estimate of 6.6% growth for the fiscal year ending March 2025.
The slowdown follows a surprisingly weak performance in the July-September quarter of FY24, when GDP grew by just 5.4%, prompting the RBI to lower its full-year growth forecast from 7.2% to 6.6%. The advance estimate, a critical input for budgetary calculations, underscores the challenges facing the Indian economy as it navigates global uncertainties and domestic structural issues.
Despite the broader deceleration, key sectors are expected to show resilience. Agriculture and allied activities are forecast to grow by 3.8%, a marked improvement from the 1.4% growth in FY24. The construction sector remains a standout, with an anticipated expansion of 8.6%, while the financial, real estate, and professional services sector is projected to grow by 7.3%.
Private Final Consumption Expenditure (PFCE), a vital indicator of household spending, is set to grow by a robust 7.3% in FY25, rebounding strongly from 4.0% in FY24. Government Final Consumption Expenditure (GFCE) is also expected to pick up pace, with a growth rate of 4.1%, up from 2.5% last year. These figures indicate a recovery in both private and public spending, which could act as a cushion against the overall economic slowdown.
Real Gross Value Added (GVA), a measure of economic output, is also projected to grow at 6.4%, down from 7.2% in FY24. This reflects the tempered performance across several key sectors, even as pockets of strength persist.
The advance estimates highlight that while the overall growth trajectory is slowing, the resilience in specific sectors such as agriculture, construction, and financial services offers some optimism. Policymakers and stakeholders will likely focus on sustaining these growth engines while addressing the structural and cyclical challenges that could weigh on the economy in the coming year.
