India’s economy is projected to grow at 6.4% in FY25, marking its lowest growth rate in four years, according to the government’s first advance estimates released on January 7. This would be the first time in four years that GDP growth falls below the 7% threshold.
The economy performed well in Q1 of the FY25 period with a growth rate of 6.7% but then saw a sharp collapse to 5.4% in Q2-the lowest in nearly two years. First-half growth averaged 6%, and estimates say growth in the second half will also be below 7%.
Of late, the recent high-frequency data has been giving out mixed signals. While services activity surged to a four-month high in December when manufacturing activity touched its lowest level in 12 months, even GST collections lost steam that month by recording their weakest growth in three months, though the pace of UPI transaction sustained the recent momentum.
The RBI has estimated a 6.6 percent GDP growth for FY25, while the government has estimated the growth to be between 6.5 percent and 7 percent. Experts said a likely slowdown in the third quarter can even pull this rate downwards.
On the fiscal front, a nominal growth of 9.7% is estimated. This has given rise to apprehensions regarding the fiscal deficit. Though the government targets keeping the fiscal deficit at 5% of GDP, according to analysts, it could be contained at 4.9% due to low capital spending.
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Source: Moneycontrol
News Desk
