India’s GDP Growth Projected at 6.4% for FY2024-25: Slower Growth Amid Inflation Concerns

Real GDP Expected to Moderate After 8.2% Growth in FY2023-24; Inflation and Policy Challenges Remain Key Concerns

New Delhi, January 7: The Indian economy is projected to grow by 6.4% in real terms in FY2024-25, marking a slowdown from the 8.2% growth recorded in FY2023-24, according to the First Advance Estimates of Annual Gross Domestic Product (GDP) released by the Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday. This forecast falls 20 basis points short of the Reserve Bank of India’s (RBI) estimates.

Key Economic Projections

• Real GDP Growth: Expected at 6.4% in FY2024-25, down from 8.2% in FY2023-24.
• Nominal GDP Growth: Projected at 9.7%, a slight uptick from 9.6% in FY2023-24.
• Real GVA Growth: Estimated at 6.4%, compared to 7.2% in FY2023-24.
• Agriculture Sector Growth: Expected to rise to 3.8%, up from 1.4% in the previous fiscal year.

The real GDP is estimated to reach ₹184.88 lakh crore in FY2024-25, up from the provisional estimate of ₹173.82 lakh crore in FY2023-24.

Economic Slowdown and Inflation Challenges

India’s GDP grew by 5.4% in the July-September quarter of FY2024-25, falling short of the RBI’s forecast of 7%. A similar trend was observed in the April-June quarter, indicating a broader economic slowdown.

The moderation in growth is attributed to weakened urban consumption, dampened by persistent inflation, which has particularly affected the purchasing power of the urban poor. Food price inflation continues to be a key concern for policymakers striving to maintain retail inflation at 4% on a sustainable basis.

Recovery Signals in Q3 FY2024-25

However, the RBI noted positive recovery signs in the October-December quarter of FY2024-25, driven by:

• Strong festival-driven economic activity
• Improved rural demand

These factors suggest a potential stabilization in economic momentum, though challenges remain.

Global and Domestic Forecasts

• Fitch Ratings revised India’s GDP forecast for FY2024-25 to 6.4%, down from an earlier estimate of 7.0%.
• The RBI also cut its growth forecast to 6.6%, down from 7.2%, in its recent monetary policy update.
• The Economic Survey tabled in Parliament projected a “conservative” GDP growth range of 6.5%-7% for FY2024-25.

Looking Ahead

Despite the downward revisions, India remains the fastest-growing major economy globally, having registered an 8.2% growth rate in FY2023-24, 7.2% in FY2022-23, and 8.7% in FY2021-22.

With strong policy measures, a focus on rural demand, and easing inflationary pressures, experts remain cautiously optimistic about India’s economic prospects in FY2024-25. However, structural reforms and effective policy execution will play a crucial role in sustaining long-term growth.