India Economic Performance 2024-25

Mains Syllabus: GS III - Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Why in the News?

Recently, provisional estimates of annual gross domestic product for 2024-25 was released.

What was the economic performance of India in 2024-25?

The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) releases the Provisional Estimates (PE) of Annual Gross Domestic Product (GDP) for the Financial Year (FY) 2024-25.

• Real GDP Growth - GDP at Constant Prices is estimated to attain a level of Rs. 187.97 lakh crore in FY 2024-25 registering a growth rate of 6.5%.
• Nominal GDP Growth – GDP at Current Prices is estimated to attain a level of Rs. 330.68 lakh crore in the FY 2024-25, against Rs. 301.23 lakh crore in FY 2023-24, showing a growth rate of 9.8%.

• Real GVA Growth – It is estimated at Rs. 171.87 lakh crore in the FY 2024-25, registering a growth rate of 6.4%.

• Last Quarter Growth - In Q4 of FY 2024-25, Real GDP and Nominal GDP has been estimated to grow by 7.4% and 10.8% respectively.
• Sectoral Composition of GVA – Financial , Real Estates & Professional Services accounts for 23% of Nominal GVA in FY 2024-25.

• Sector-wise Estimate - ‘Construction’ sector is estimated to record a growth rate of 9.4% in FY 2024-25, followed by 8.9% growth rate in ‘Public Administration, Defence & Other Services’ sector.

• Growth of Primary Sector - Primary Sector has seen 4.4% growth rate as compared to growth rate of 2.7% observed in previous financial year.

Primary Sector: Agriculture, Livestock, Forestry & Fishing and Mining & Quarrying

Secondary Sector: Manufacturing, Electricity, Gas, Water supply & Other Utility Services and    Construction

Tertiary Sector: Trade, Hotels, Transport, Communication and Services related to Broadcasting, Financial, Real Estate & Professional Services and Public Administration, Defence & Other Services

• PFCE Growth - Private Final Consumption Expenditure (PFCE) has reported 7.2% growth rate during FY 2024-25 as compared to 5.6% growth rate in the previous financial year.
• GFCF Expansion - Gross Fixed Capital Formation (GFCF) has a measure of asset creation by the public and private sector, saw growth slowing to 7.1% in 2024-25 from 8.8% in 2023-24.

What is the takeaway from the provisional estimate report?

• Slow but Comparatively Better Growth - The 6.5% growth in 2024-25, the slowest since the pandemic but the fastest among major economies.
• In a growth-scarce environment, post-COVID and despite the rising uncertainties due to political conflicts and trade tensions, India is holding up its growth numbers better than many advanced economies.
• Robust Growth in Fourth Quarter – The real GDP growth in Q4 of 2024-25 accelerated to 7.4%, the fastest quarterly growth in the year.
• But it was slower than the 8.4% seen in the fourth quarter of the previous financial year.
• Main Drivers of Growth - The construction sector returned to double-digit growth, and the agriculture sector posted a strong performance and these are also two major employment drivers.
• Decline in Manufacturing - The manufacturing sector grew at just 4.8%, down from 11.3% in Q4 of the previous year.
• Major Role of Taxes - The GDP growth rate of 7.4% was achieved in large part due to a 12.7% growth in net taxes.
• This bump in tax collections provided a statistical boost without which growth in actual economic activity would have come in at around 6.8%.

What lies ahead?

• To keep pace with the country’s growing requirements and acheive a ‘Viksit Bharat’ by 2047, the growth must be held to a higher standard in line with its aspirations.
• As the Economic Survey points out, Viksit Bharat by 2047 requires “sustained economic growth of close to 8% every year for at least a decade.

References

1. PIB | PROVISIONAL ESTIMATES OF ANNUAL GDP FOR 2024-25
2. The Hindu | GDP growth slows to 6.5% in 2024-25