GDP growth to hit 4-yr-low 6.4% in FY25: Govt estimate

The Indian economy is expected to grow at 6.4% in 2024-25, a significant loss of momentum when compared to the 8.2% growth in 2023-24.

- Roshan Kishore

NEW DELHI: Driven by a slowdown in investment, this is the lowest this number has been since the pandemic induced a contraction of 5.8% in 2020-21 and is also lower than both the Reserve Bank of India's and government's initial forecasts -- suggesting that the policy establishment either did not see the slowdown coming or was complacent about headwinds to growth, including those generated by monetary policy.

How economic policy responds to these numbers will be seen in the Union Budget which is due on February 1 and the next Monetary Policy Committee (MPC) meeting of RBI which is scheduled from February 5-7. The former will decide the broad direction of fiscal policy and the latter will decide whether monetary policy finally makes an effective pivot and starts cutting interest rates. This will provide relief to households with mortgage payments as well as lower the cost of new investment.

The National Statistical Office (NSO) released the first advanced estimates of GDP for the fiscal year 2024-25 on Tuesday projecting a GDP growth of 6.4%. This number was 7% and 8.2% in 2022-23 and 2023-24. The 2021-22 GDP growth of 9.7% is misleading because it came on the back of a -5.8% number in 2020-21.