India’s economic growth in FY 2024-25 has moderated to 6.5%, marking the slowest pace in four years, according to the latest data from the National Statistics Office (NSO). This slowdown contrasts with the faster growth seen during the pandemic recovery years but still places India among the world’s fastest-growing major economies.
Here are the key highlights and insights from the report:
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GDP Growth: Real GDP grew by 6.5% in FY25, down from higher rates in previous years. Nominal GDP growth was 9.8%, slightly below the earlier government forecast of 9.9%.
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Quarterly Performance: The last quarter (Q4) showed a stronger performance, with real GDP growth at 7.4%, the fastest quarterly pace in the year. The third quarter was revised up to 6.2% from an earlier estimate of 5.6%.
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Global Context: The IMF projects that India will overtake Japan as the world’s third-largest economy in 2025, reaching a GDP size of $4.18 trillion.
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Sector-wise Growth:
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Private consumption rose 7.2% YoY, driven largely by rural demand, easing food inflation, and a stronger festive season.
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Agriculture growth improved notably to 4.6% for FY25, with Q4 at 5.4%, a significant jump from 0.9% in Q4 last year.
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Construction grew by 9.4% YoY, slightly slower than the previous year’s 10.4%, but Q4 growth accelerated to 10.8%.
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Manufacturing slowed sharply, growing only 4.5% for FY25 compared to 12.3% the prior year, and Q4 growth at 4.8% also down from 11.3% a year earlier.
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Economic Outlook and Policy Implications:
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Analysts see the data reflecting a “patchy recovery” with some sectors slowing while others gain momentum.
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Inflation remains benign, which along with soft growth, may encourage the Monetary Policy Committee (MPC) to ease rates further, potentially by 25 basis points in June 2025.
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The divergence between GDP and GVA (Gross Value Added) growth—6.5% vs. 6.8% respectively—was influenced by a high increase in net indirect taxes.
Summary:
While growth is cooling compared to recent robust years, the economy shows resilience, particularly in Q4. Rural demand and agriculture continue to be bright spots, but manufacturing’s slowdown could be a concern. The overall picture suggests cautious optimism with monetary easing expected to support a steady recovery moving forward.
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