New Delhi: The government expects economic growth during the ongoing financial year 2024-25 to slide to 6.4 percent, lower than the 6.6 percent predicted by the Reserve Bank of India (RBI) in December, and significantly slower than the 8.2 percent growth seen in 2023-24. This would also be the slowest growth since the COVID-19 pandemic.
The Ministry of Statistics and Programme Implementation Tuesday released the First Advance Estimates (FAE) of gross domestic product (GDP) for 2024-25. With two months of the financial year yet to go, these numbers are estimates based on the year gone by and are not final. They will be followed by the Second Advance Estimates on 28 February, before the Provisional Estimates are released in May.
The data shows that the slowdown has been relatively broad-based, with manufacturing, construction and several categories of the services sector estimated to grow slower in 2024-25 than in the previous year. The agriculture sector, on the other hand, has outperformed.
“Real GDP has been estimated to grow by 6.4 percent in FY 2024-25 as compared to the growth rate of 8.2 percent in the Provisional Estimate (PE) of GDP for FY 2023-24,” the government’s press release said.
It added that nominal GDP—which includes the effect of inflation into its calculations—is estimated to grow 9.7 percent in FY25, marginally higher than 9.6 percent in FY24.
The secondary sector—which includes manufacturing, construction, and utilities—is expected to grow at 6.5 percent in FY25, down sharply from 9.7 percent in the previous year. Within this, the manufacturing sector is expected to slow to 5.3 percent from 9.9 percent over the same period.
The construction sector is estimated to see growth slowing to a relatively robust 8.6 percent in FY25 from 9.9 percent in the previous year. The utilities sector is estimated to slow to 6.8 percent growth from 7.5 percent in FY24.
The overall tertiary sector—which comprises the services sectors—is set to see growth slowing to 7.2 percent from 7.6 percent in 2024-25. Looking deeper, the data shows that the ‘trade, hotels, transport and communications’ sector is estimated to slow to 5.8 percent growth in 2024-25 from 6.4 percent in the previous year.
Financial, real estate and professional services together are likely to see growth slowing to 7.3 percent in 2024-25 from 8.4 percent in 2023-24. It is only the ‘public administration, defence, and other services’ that is expected to see accelerating growth among India’s services sectors—from 7.8 percent in 2023-24 to 9.1 percent in 2024-25.
The primary sector, which comprises agriculture and mining, is expected to see growth accelerate from 2.1 percent to 3.6 percent in FY25, with the surge in growth in the agriculture sector making up for a slowdown in mining.
The agriculture sector is expected to see growth accelerating to 3.8 percent in 2024-25 from 1.4 percent in the previous year. The mining sector, however, is set to see growth slumping to just 2.9 percent in FY25 from 7.1 percent in the previous year.
The data also shows that the government expects growth in gross fixed capital formation—by both itself as well as the private sector—to slow to 6.4 percent in 2024-25 from 9 percent in the previous year.
On the other hand, private final consumption expenditure is expected to grow quicker—at a rate of 7.3 percent in 2024-25 from 4 percent in the previous year.
(Edited by Radifah Kabir)