The National Statistical Office (NSO) released provisional estimates (PE) of the annual growth statistics for the Indian economy, last Friday. The data indicates that the Indian economy grew at a rate of 7.4% (real GDP) in 4QFY25 and at a rate of 6.5% for the full year FY25.
The key highlights of the growth data could be listed as follows:
FY25 Growth
Real GDP: Estimated at ₹187.97 lakh crore at constant (2011-12) prices.
Growth rate: 6.5% compared to ₹176.51 lakh crore in FY 2023-24 (8.2% growth in FY24).
Nominal GDP: Estimated at ₹330.68 lakh crore.
Growth rate: 9.8% compared to ₹301.23 lakh crore in FY 2023-24.
Real Gross Value Added (GVA): Estimated at ₹171.87 lakh crore at constant prices.
Growth rate: 6.4% compared to 7.2% in FY 2023-24.
Nominal GVA: Growth rate: 9.5% compared to 8.5% in FY 2023-24.
Quarterly GDP Estimates for Q4 FY 2024-25 (January-March 2025)
Real GDP: Estimated at ₹51.35 lakh crore at constant prices.
Growth rate: 7.4% compared to ₹47.82 lakh crore in Q4 FY 2023-24.
Real GVA: Estimated at ₹45.76 lakh crore at constant prices.
Growth rate: 6.8% compared to Q4 FY 2023-24.
Observations
The 6.5% real GDP growth in FY25 is lower than the 8.2% recorded in FY24, reflecting a slowdown attributed to factors like reduced government capital expenditure and sluggish private investment.
The Q4 FY25 growth of 7.4% indicates a rebound from the 5.4% growth in Q2 FY25, driven by strong performances in manufacturing, construction, financial services, and agriculture, supported by a good monsoon and easing inflation.
The agriculture sector’s improved performance (3.8% growth) is a notable positive, while manufacturing and mining sectors saw slower growth compared to FY24.
The estimates are provisional and subject to revision as more data becomes available, with the next update (Second Advance Estimates and Q3 FY25 data) scheduled for February 28, 2025.
Sectoral trends
In FY25, most sectors experienced slower growth in FY25 compared to FY24, contributing to the overall real GVA growth of 6.4% (down from 7.2%). The slowdown is attributed to a high base effect from FY24, reduced government capital expenditure, high interest rates, and global economic challenges.
Agriculture’s recovery (3.8%) and construction’s robust growth (9.4%) were key positives, supported by favorable monsoons and infrastructure investments, respectively. Q4 FY25 showed a rebound (6.8% GVA growth), indicating improving economic momentum.
Manufacturing (5.0%) and mining (4.2%) remained the key areas of concerns, reflecting industrial and external demand weaknesses. Trade and hospitality also saw moderated growth due to cautious consumer behavior.
Agriculture, Livestock, Forestry, and Fishing
Growth Rate: 3.8% in FY25 (up from 1.4% in FY24).
Farm sector recorded a significant recovery compared to the previous year’s low growth. The improvement is primarily driven by favorable monsoon conditions, which boosted agricultural output. Enhanced livestock and fishery activities also contributed. The sector’s resilience is notable, as it supports rural economies and overall food security, despite challenges like fluctuating global commodity prices.
The growth trend also indicates better crop yields and government support through schemes like minimum support prices (MSP) and rural infrastructure investments.
Mining and Quarrying
Growth Rate: 4.2% in FY25 (down from 7.1% in FY24).
Mining sector experienced a notable slowdown, reflecting reduced demand for minerals and challenges in global commodity markets. Domestic factors like regulatory constraints and environmental clearances may have also impacted mining activities.
The decline suggests a moderation in industrial demand for raw materials, potentially linked to slower manufacturing growth and global economic uncertainties.
Manufacturing
Growth Rate: 5.0% in FY25 (down from 9.9% in FY24).
Manufacturing growth decelerated significantly, driven by weaker domestic and export demand, high input costs, and supply chain disruptions. The sector faced challenges from elevated interest rates and stricter lending norms, which constrained industrial expansion.
However, despite the slowdown, manufacturing showed some recovery in Q4 FY25, contributing to the overall GDP growth of 7.4% for that quarter. Government initiatives like "Make in India" and production-linked incentives (PLI) continue to support the sector, but external pressures limited growth.
Electricity, Gas, Water Supply, and Other Utility Services
Growth Rate: 7.5% in FY25 (down from 7.8% in FY24).
The utilities sector maintained relatively strong growth, though slightly lower than the previous year. Steady demand for electricity, driven by industrial and domestic consumption, and investments in renewable energy supported this performance. Water supply and utility services also contributed positively.
The marginal decline reflects stable but not exceptional growth, with ongoing infrastructure investments in clean energy and utilities providing a foundation for resilience.
Construction
Growth Rate: 9.4% in FY25 (down from 10.4% in FY24).
Construction remained a robust performer, driven by government-led infrastructure projects, urban development, and real estate demand. The slight slowdown from FY24 is attributed to reduced government capital expenditure compared to the previous year’s high base.
The sector’s strong growth underscores its role as a key driver of economic activity, supported by initiatives like the National Infrastructure Pipeline and housing schemes.
Trade, Hotels, Transport, Communication, and Broadcasting
Growth Rate: 6.1% in FY25 (down from 7.5% in FY24).
This sector saw a moderation in growth due to weaker performance in trade and hospitality, impacted by reduced consumer spending in certain segments and global trade slowdowns. Transport and communication services, however, benefited from digital infrastructure investments and logistics improvements.
The decline reflects challenges in discretionary spending, though digital services and logistics provided some cushion.
Financial, Real Estate, and Professional Services
Growth Rate: 7.3% in FY25 (down from 8.4% in FY24).
This part of the services sector maintained solid growth, driven by financial services (banking, insurance) and real estate, supported by urban demand and digital financial inclusion. Professional services, including IT and consulting, continued to perform well, though export-oriented IT services faced global headwinds.
The slight decline from 8.4% to 7.3% reflects global economic uncertainties affecting IT exports, but domestic financial services remained a strong contributor.
Public Administration, Defense, and Other Services
Growth Rate: 7.8% in FY25 (down from 7.9% in FY24).
This public services sector showed steady growth, driven by government spending on public administration, defense, and social services. The marginal decline reflects a normalization from FY24’s high growth, with fiscal constraints limiting expenditure growth.
The sector’s consistent performance (7.8%) highlights the prominent role of government spending in stabilizing economic growth, particularly in Q4 FY25.
More on Growth trends tomorrow.
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