India’s GDP Grows by 6.5% in FY 2024-25, Down from 9.2% Last Year but Beats Estimated 6.3%

India’s economy grew by 6.5% in the financial year 2024-25, according to provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI). Although this growth rate is lower than the 9.2% recorded last year, the economy showed strong momentum in the last quarter, growing at 7.4%. This was higher than many analysts expected.

Overall Economic Growth

The gross domestic product (GDP) measures the total value of goods and services produced in the country. For FY 2024-25, India’s GDP reached ₹187.97 lakh crore, up from ₹176.51 lakh crore the previous year.

The nominal GDP, which factors in inflation, grew by 9.8% and stood at ₹330.68 lakh crore. This slower annual growth reflects the effects of global economic challenges and some domestic factors. However, the growth in the last three months of the fiscal year shows that the economy is recovering and could perform better in the coming months.

Growth Across Key Sectors

India’s economy is divided into three main sectors: primary (agriculture and mining), secondary (manufacturing, construction, electricity, etc.), and tertiary (services). The primary sector grew by 4.4% in FY 2024-25, an improvement from the previous year’s 2.7%. The last quarter saw a 5% growth, thanks to good rainfall and increased agricultural output.

The secondary sector, which includes manufacturing and construction, grew strongly by 9.4% for the year. Construction was a major driver, expanding by nearly 11% in the last quarter.The services sector grew by 7.2% overall and by 7.8% in the final quarter. Growth was supported by increased government spending, financial services, and consumer demand.

Drivers of Growth

Several factors contributed to the GDP growth. Spending by individuals, known as private consumption, increased by 7.2%, higher than last year’s 5.6%. This indicates that consumers are feeling more confident and willing to spend more.

Investment in buildings, machinery, and infrastructure, measured by gross fixed capital formation, grew by 7.1% over the year and accelerated to 9.4% in the last quarter. This suggests that both businesses and the government are investing in growth.

At the same time, government spending on public services and infrastructure remained strong, helping to keep the economy moving.

Challenges and Outlook

Despite this progress, the 6.5% growth rate is the slowest in four years. Various factors could slow growth further, including global uncertainties, inflation, and geopolitical tensions.

Experts suggest that the economy will need continued support from investments and strong consumer spending to maintain its growth momentum.

The strong growth in the last quarter provides hope that the economy is regaining strength. If this momentum continues, India could see better growth in the year ahead.

What This Means for India?

India remains one of the fastest-growing major economies in the world despite recent challenges. The government’s focus on infrastructure, manufacturing, and services is helping to sustain growth.

Consumer confidence is rising, and investment is picking up. However, maintaining this growth will require careful management of economic risks, including inflation and external pressures.

The government’s fiscal policies and reforms will play an important role in supporting the economy.

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