India’s GDP Growth Projections

January 20, 2025

Recent estimates indicate a real GDP growth of 6.4% for India in the fiscal year 2024-25, falling short of earlier predictions. This slowdown has raised concerns about the government’s capital expenditure and its impact on future economic performance. The projections for the upcoming fiscal year suggest a reliance on domestic demand and increased government investment to stimulate growth.

Current GDP Estimates

The First Advance Estimates show a real GDP growth of 6.4% and nominal GDP growth of 9.7% for 2024-25. This is below the Reserve Bank of India’s revised estimates of 6.6% and 10.5%, respectively. Growth is expected to improve slightly in the second half of the year.

Sectoral Performance

The manufacturing sector has seen decline, with growth dropping from 9.9% in 2023-24 to just 5.3% in 2024-25. This has contributed to the overall dip in GDP growth.

Investment Trends

Gross Fixed Capital Formation has stabilised around 33.4% from 2021-22 to 2024-25. A continuation of this rate is anticipated for 2025-26, with a projected real GDP growth of 6.5%.

Government Capital Expenditure

Government capital expenditure has been negative at -12.3% for the first eight months of the fiscal year. Current expenditure stands at ₹5.14 lakh crore, only 46.2% of the budget target.

Future Growth Prospects

The International Monetary Fund projects a steady real GDP growth rate of 6.5% for India from 2025-26 to 2029-30. This growth may be accompanied by inflation around 4%, leading to nominal GDP growth of 10.5%-11%.

Challenges Ahead

Achieving a sustained growth rate of 6.5% will be challenging as the economic base expands. Increased government investment is crucial to stimulate private investment.

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