India’s GDP growth projected to dip to 6.4% in FY25, lowest in four years
PTC Web Desk: The Ministry of Statistics and Programme Implementation (MoSPI) has maintained India's GDP growth projection at 6.4% for the fiscal year 2024-25. This figure marks a decline from the 8.2% growth recorded in FY 2023-24. The updated estimates were released on Tuesday.
Since FY 2022, India’s annual GDP growth has consistently remained at or above 7%. However, FY 2025 may break this trend, with growth potentially slipping below the 7% mark for the first time in four years. Historical data shows GDP growth of 9.7% in FY 2022, 7% in FY 2023, and 8.2% in FY 2024.
Despite a sluggish first half (H1) of FY 2025, the ministry remains optimistic about recovery in the second half (H2), driven by an uptick in agricultural and industrial activities alongside increased rural demand. The Reserve Bank of India (RBI) had earlier projected a slightly higher growth rate of 6.6%.
Even with a deceleration, India remains the fastest-growing major economy globally. In comparison, China recorded a GDP growth of 4.6% in the July-September 2024 quarter, while Japan’s economy grew at just 0.9% during the same period.
Understanding GDP: A key economic indicator
Gross Domestic Product (GDP) is one of the most commonly used indicators to assess a nation's economic health. It represents the total value of goods and services produced within a country during a specific period. GDP also includes the production output of foreign companies operating within India.
Types of GDP:
Real GDP: Calculated based on constant prices (current base year: 2011-12) to eliminate inflationary effects.
Nominal GDP: Measured using current market prices, reflecting the prevailing economic conditions.
Calculation Formula:
GDP = C G I NX
C: Private consumption
G: Government spending
I: Investments
NX: Net exports (total exports minus total imports)
Factors driving GDP growth or decline
Four key factors influence GDP growth:
Private Consumption: Spending by individuals contributes significantly to the economy.
Private Sector Growth: Businesses contribute approximately 32% to India’s GDP.
Government Expenditure: Government spending accounts for around 11% of GDP.
Net Demand: The difference between exports and imports affects GDP. Since India’s imports often exceed exports, this factor tends to have a negative impact.
While challenges persist, the government remains confident in India’s economic resilience, supported by structural reforms and policy initiatives aimed at driving sustainable growth
- With inputs from agencies
