India’s Growth Outlook

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India’s real GDP growth for 2024-25 is estimated at 6.4%, with medium-term prospects of steady growth driven by government spending and private investments.

The First Advance Estimates (FAE) for 2024-25 indicate a real GDP growth rate of 6.4% and nominal GDP growth of 9.7%, below the Reserve Bank of India’s earlier projections. The annual GDP growth is split between 6% in the first half and 6.7% in the second, signaling improvement after Q2’s 5.4% growth. Manufacturing saw a significant decline in sectoral growth, dropping from 9.9% in 2023-24 to 5.3% in 2024-25.

India’s capital expenditure growth, critical for driving GDP, reached only 46.2% of the budgeted target by the end of the fiscal year’s first eight months. This underperformance slowed GDP growth. However, a 10.7% growth in gross tax revenue for the same period suggests minimal fiscal strain, with shortfalls unlikely to impede capital spending.

For 2025-26, India’s real GDP growth is projected at 6.5%, aligning with the IMF’s outlook for the 2025-29 period. This growth assumes sustained capital expenditure at 20% of GDP and a 2.5% annual exchange rate depreciation. Medium-term prospects may also depend on global economic conditions and net exports.

Achieving higher GDP growth will require accelerated government spending and increased private investments. While the projected 6.4% growth in 2024-25 may seem modest, it reflects realistic potential within India’s current economic framework and is a foundation for long-term economic development.

India’s real GDP growth for 2024-25 is estimated at 6.4%, with medium-term prospects of steady growth driven by government spending and private investments.

The First Advance Estimates (FAE) for 2024-25 indicate a real GDP growth rate of 6.4% and nominal GDP growth of 9.7%, below the Reserve Bank of India’s earlier projections. The annual GDP growth is split between 6% in the first half and 6.7% in the second, signaling improvement after Q2’s 5.4% growth. Manufacturing saw a significant decline in sectoral growth, dropping from 9.9% in 2023-24 to 5.3% in 2024-25.

India’s capital expenditure growth, critical for driving GDP, reached only 46.2% of the budgeted target by the end of the fiscal year’s first eight months. This underperformance slowed GDP growth. However, a 10.7% growth in gross tax revenue for the same period suggests minimal fiscal strain, with shortfalls unlikely to impede capital spending.

For 2025-26, India’s real GDP growth is projected at 6.5%, aligning with the IMF’s outlook for the 2025-29 period. This growth assumes sustained capital expenditure at 20% of GDP and a 2.5% annual exchange rate depreciation. Medium-term prospects may also depend on global economic conditions and net exports.

Achieving higher GDP growth will require accelerated government spending and increased private investments. While the projected 6.4% growth in 2024-25 may seem modest, it reflects realistic potential within India’s current economic framework and is a foundation for long-term economic development.