FY25 growth at 4-year low of 6.5%, slowest since Covid

India’s economic growth in 2024-25 fell to a four-year low of 6.5 per cent, decelerating from 9.2 per cent a year ago and the slowest since Covid, even as the January-March figure of 7.4 per cent was the fastest in the four quarters. The estimates released by the National Statistics Office (NSO) on Friday put the size of the economy at Rs 330.68 lakh crore (USD 3.9 trillion), placing the country on track for its goal of becoming a USD 5 trillion economy in the next few years. The fourth quarter estimates surpassed expectations by reaching 7.4 per cent as against 6.4 per cent in the October-December period, 5.6 per cent from July to September and 6.5 per cent in the April-June quarter of the previous fiscal. The NSO’s second advance estimate in February had projected a GDP growth of 6.5 per cent for 2024-25. Finance Minister Nirmala Sitharaman lauded the data and said the country was sustaining the GDP growth momentum as the fastest-growing economy for the fourth year in a row. “Thanks to the small and medium, large industries, which are coming in and making sure our manufacturing capacity and our service capacity remain intact. Agriculture sustained us even during Covid and subsequently. In the January-March quarter, there were views that the industry wasn’t investing enough and capacities were not increasing, and that it was impacting the economy,” Sitharaman said in her address at the Lakshmipat Singhania-IIM Lucknow National Leadership Awards. Sitharaman said during the fourth quarter of FY25, manufacturing output grew at 4.8 per cent, and the services and farm sector at 5.4 per cent each. Officials said the fourth quarter data was encouraging given the scale of uncertainties that marked this period of global trade disruptions on account of US President Donald Trump’s tariff-related announcements and the Russia-Ukraine war. Government sources said high rural demand coupled with substantial government spending powered consumption and growth. The International Monetary Fund has already projected the Indian economy to touch USD 4.18 trillion, surpassing that of Japan by year-end. The NSO data said the construction sector powered the growth, followed by public services and financial services. “The construction sector is estimated to record a growth of 9.4 per cent in FY25, followed by 8.9 per cent growth rate in public administration, defence and other services sector and 7.2 per cent in financial, real estate and professional services sector,” the NSO said. During the FY25 fourth quarter, the construction sector witnessed 10.8 per cent growth, followed by 8.7 per cent in public administration, defence and other services and 7.8 per cent in financial, real estate and professional services. “The primary sector has seen 4.4 per cent growth as compared to 2.7 per cent in the previous financial year. During FY25 Q4, this sector observed 5 per cent growth as compared to 0.8 per cent in previous financial year’s Q4,” the NSO said. The primary sector includes activities like agriculture, forestry, fishing and mining—industries that draw raw material from natural resources. The private consumer spending, which reported 7.2 per cent growth in FY25 as compared to 5.6 per cent in the previous financial year, powered the rural demand. Another positive data relates to gross fixed capital formation (GFCF), which recorded 7.1 per cent growth in FY25 and 9.4 per cent in Q4. The GFCF refers to the investment made in fixed capital assets like machinery, buildings and equipment and represents the growth in an economy’s fixed assets. It is a measure of the economy’s investments in long-term productive capacity. The RBI has projected a 6.5 per cent growth for the fiscal year starting April 1, 2025.

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