The Ministry of Statistics said on Tuesday that the gross domestic product (GDP) estimates for fiscal year 2024-25 (FY25) will remain at 6.4 percent. Despite a sluggish first half (H1) of FY25, the ministry expects an increase in agricultural and industrial activity, as well as resilient rural demand in the second half, to keep India on track to achieve 6.4-6.8 percent growth by the end of the fiscal year.
"Real GDP is expected to grow by 6.4% in FY 2024-25, compared to an 8.2% growth rate in the Provisional Estimate (PE) of GDP for FY 2023-24. Nominal GDP grew by 9.7 percent in FY 2024-25, up from 9.6 percent in FY 2023-24," Ministry of Statistics and Programme Implementation stated in its official announcement.
Improvements in agriculture
The agriculture and allied sectors have improved significantly, with Real GVA growth expected to reach 3.8% in FY25, up from 1.4% the previous year.
This shows that the agricultural sector has grown faster, either due to better monsoons, improved crop yields, or policy actions targeted at increasing rural incomes and agricultural productivity.
Construction and service sectors
The construction, finance, real estate, and professional services sectors are also predicted to increase significantly. The construction sector's Real GVA is expected to increase by 8.6%, reflecting continuous infrastructure development, housing demand, and urbanisation trends.
Similarly, the financial, real estate, and professional services industry is predicted to expand by 7.3%, reflecting robust success in banking, real estate development, and business services, fueled by both domestic and foreign demand.
Increased private consumption
In terms of expenditure patterns, Private Final Consumption Expenditure (PFCE) at constant prices increased by 7.3% in FY25, a major rise over the previous year's growth of 4%.
PFCE is a crucial indicator of domestic consumption, indicating household spending behavior, and this increase indicates an improvement in consumer confidence, purchasing power, and overall economic recovery.
Government spending increases
Similarly, government final consumption expenditure (GFCE), which refers to government spending on goods and services, has returned substantially, growing at a rate of 4.1% in FY25, up from 2.5% the previous year.
This increase in government spending could be linked to increasing public investments in infrastructure, social programs, and welfare schemes designed to stimulate economic growth.
Previous FY25 growth forecasts
The real GDP growth rate for the last fiscal year, FY24, was 8.2%. The Economic Survey report, released in July 2024, predicted a growth rate of 6.5 to 7% for the fiscal year ending March 2025. In its November review, the finance ministry reduced its GDP predictions to approximately 6.5%, citing the Reserve Bank of India's (RBI) monetary policy stance as one of the reasons for the slowdown in the first half of FY25.
RBI revised its GDP predictions
In its most recent monetary policy committee meeting, the Reserve Bank drastically reduced its growth outlook for FY25 to 6.6% from an earlier estimate of 7.2%. The revised projections come after India's GDP in the second quarter (Q2) fell to a seven-quarter low of 5.4%, compared to its own expectation of 7%. India's growth slowed for the third quarter in a row. However, the central bank claimed that rural consumption, government spending, investment, and robust service exports will boost GDP in the third and fourth quarters of this fiscal year.
Quarterly GDP predictions by the RBI were:
Q1 FY25: 6.9%.
Q2 FY25: 7.3%.
Q3 FY25: 6.8 percent (estimates)
Q4 FY25: 7.2% (estimates)
This statement comes three weeks before the national government releases the Union Budget for 2025–26.
