First advance estimates: Ahead of Budget 2025, India braces for sluggish 6.4% economic growth

India’s economy is poised for its slowest growth in four years, with GDP expected to grow by 6.4% in fiscal 2024-25.

The first preliminary estimates released by the Central Statistics Office just ahead of the Union Budget point to a significant slowdown in the economic trajectory.

This forecast is in line with a Bloomberg poll of economists predicting growth of 6.4%.The Reserve Bank of India also cut its forecast for the previous fiscal year, revising its earlier estimate of 7.2% to 6.6%.

Gross value added (GVA), a key measure that excludes indirect taxes and subsidies, is expected to grow by 6.4%, while nominal GDP, which is the basis of the budget calculations, is expected to grow by 9.7%.

Agriculture and allied sectors are forecast to grow at 3.8 percent in 2024-25, a significant rebound from last year’s 1.4 percent growth, while construction and the financial, real estate and professional services sectors are expected to grow steady growth of 8.6% and 7.3% respectively.

Private final consumption expenditure, a key indicator of consumer demand, grew by 7.3% this fiscal, a marked improvement from last year’s 4% growth. Similarly, government final consumption expenditure returned to 4.1% growth last year compared to 2.5% for the fiscal year.

These figures form the basis for the government’s fiscal strategy, shaping important decisions as the Union budget is large.