India’s Real GDP Growth Estimated at 6.4% in FY25, Economic Survey Highlights Macroeconomic Stability
First Published: 31st January, 2025 17:40 IST
The uncertainty over monetary policy paths remains high, as central banks navigate varying growth patterns and inflation challenges.
The Economic Survey 2024-25, presented by Union Finance Minister Nirmala Sitharaman in Parliament today, projected India’s real GDP growth at 6.4% in FY25, aligning closely with its decadal average. The real Gross Value Added (GVA) is also expected to grow at the same rate. Looking ahead, GDP growth in FY26 is estimated to be between 6.3% and 6.8%, factoring in both potential opportunities and risks. The survey highlighted India’s steady economic expansion amid global uncertainties, supported by fiscal discipline, external balance, and strong domestic demand.
The global economy grew at an average of 3.3% in 2023, slightly exceeding the IMF’s five-year projection of 3.2% growth. However, economic performance varied across regions, with manufacturing slowing down in Europe and parts of Asia due to supply chain disruptions and weak external demand. Meanwhile, the services sector performed better, contributing to growth in many economies. Inflationary pressures eased across most regions, yet services inflation remained persistent. While commodity prices have largely stabilised, there is still a risk of synchronised price increases. The uncertainty over monetary policy paths remains high, as central banks navigate varying growth patterns and inflation challenges. Additionally, geopolitical tensions, trade policy risks, and ongoing global conflicts continue to pose significant threats to economic stability.
Despite global challenges, India demonstrated resilient economic growth in FY25. The Economic Survey stated, “As per the first advance estimates of national accounts, India’s real GDP is estimated to grow by 6.4% in FY25. Growth in the first half of FY25 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favourable agricultural conditions. The manufacturing sector faced pressures due to weak global demand and domestic seasonal factors. Private consumption remained stable, reflecting steady domestic demand.” Key factors supporting India’s economic stability include fiscal discipline, a robust services trade surplus, and healthy remittance growth. These elements provided a strong foundation for sustained growth despite external uncertainties.
Looking ahead, India’s growth outlook for FY26 remains balanced, with both upsides and potential risks. Positive growth drivers include rural demand recovery backed by record agricultural production, easing food inflation, a stable macroeconomic environment, stronger consumer confidence, corporate wage growth, and increased private sector investments in capital goods. However, challenges such as geopolitical and trade uncertainties, fluctuating commodity prices, and a global economic slowdown impacting exports may pose hurdles. The Economic Survey stressed the importance of structural reforms and deregulation to enhance India’s global competitiveness and sustain long-term growth. Strengthening domestic industries, improving ease of doing business, and fostering innovation will be key to reinforcing India’s economic momentum in the coming years.
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