India’s economy is projected to grow at 6.4% in the fiscal year 2024-25, according to the first advance estimates released by the National Statistics Office (NSO). This marks a significant slowdown compared to the 8.2% growth recorded in the previous year, making it the slowest growth rate in four years. The reduction in growth is attributed to weaker performance in manufacturing and sluggish investment, though strong growth in the agricultural sector is expected to offer some relief by supporting rural consumption.
This growth forecast is slightly below the Reserve Bank of India’s (RBI) revised estimate of 6.6% and the government’s own projections, which range between 6.5% and 7%. The 6.4% growth is the lowest since the COVID-19 pandemic, highlighting the ongoing challenges in urban consumption and investment. The slowdown became evident during the July-September quarter, when growth dipped to a seven-quarter low of 5.4%, raising expectations for a rate cut by the RBI in February.
The manufacturing sector is expected to grow at a slower pace of 5.3% compared to 9.9% in the previous year, while the services sector shows a modest slowdown, with a projected growth of 7.2%. However, the agricultural sector remains a bright spot, expected to expand by 3.8%, up from 1.8% last year. The construction sector also remains strong with a growth projection of 8.6%, though slightly lower than last year’s 9.4%.
Private final consumption expenditure (PFCE) is expected to grow by 7.3%, a significant increase from the 4% rise in the previous year. The advance GDP estimates were calculated using the benchmark-indicator method, which extrapolates data from previous years based on current sector performance indicators.
