NEW DELHI: The Indian economy is slowing and is likely to post the weakest GDP growth numbers since 2021-22, according to the first advance estimate by the National Statistics Office (NSO). The NSO data, released on Tuesday, show that real GDP growth in FY25 is likely to have decelerated to 6.4% compared to 8.2% in the previous financial year. NSO’s estimate for FY25 is lower than the 6.6% growth forecast by the Reserve Bank of India.
If GDP grows at 6.4% in FY25, it will be the lowest since FY21 when the country witnessed a negative growth of 5.8% due to the pandemic. Growth recovered to 9.7% in FY22 largely due to the base effect, and it grew 7% in FY23.
The moderation in growth expectation can be attributed to the slow pickup in government and private investments, which grew at 6.4% in FY25, compared with 9% in FY24.
The NSO estimates also show a 7.3% growth in private consumption in real terms in FY25 compared to 4% in the previous year. This comes as a surprise amid all the talks of consumption slowdown.
Analysts attribute the consumption growth to rural demand pickup. “Rural consumption, which constitutes about 60% of India’s total private consumption, will receive a boost from healthy kharif production and promising prospects for the rabi season. This is reflected in higher agricultural growth estimated for this fiscal,” said Dharmakirti Joshi, chief economist, Crisil.
The advance estimates are important because they will be used in preparation for the Union Budget.