FY25 GDP Advance Estimates: Economists Peg Growth At 6.4%

The Indian economy is likely to see growth decelerate to a four-year low in the fiscal 2024-25.

Ahead of the union budget, the ministry of statistics and program implementation will release its first advance estimates on Tuesday. A Bloomberg poll of economists estimates the country's GDP to rise 6.4% in fiscal 2025. GDP growth for the fiscal is projected at 6.6% by the Reserve Bank of India.

GDP grew at 5.4% in the second quarter of the ongoing fiscal—the lowest pace in seven quarters, led by slower growth across the industrial sector. This was compared to 6.7% in the preceding quarter. The lower-than-expected growth has tempered estimates for the full year, despite expectations of a bounce back expected in the second half of the fiscal.

Amidst the concerns over the visible signs of slowdown in growth over the past few months, the recovery seen in October in some of the crucial indicators has persisted towards the year-end, stated a research note by Rahul Bajoria, India and ASEAN economist at BofA Securities. However, a few other indicators continue to lag, making the third quarter certainly better than the second quarter but potentially slower than the 8.4% year-on-year seen in the October-December period, he said.

While farm output, fuel consumption, core sectors, and air traffic remain bullish, credit growth and fiscal and consumption indicators have remained soft, said Bajoria, who forecasts growth at 6.5% for the full year, with risks biased to the downside. This print accounts for the weaker-than-expected growth print of 5.4% in the July-September period but still factors in a rebound in activity in the second half of the current financial year, as fiscal spending picks up, rural sector growth improves, and credit conditions potentially stop tightening.

Jahnavi Prabhakar, an economist at the Bank of Baroda who forecasts growth to range between 6.6-6.8% for the full year, also said that growth in the second half is expected to be driven by government spending, a pick up in capex, strong investment, and a revival in consumption demand—both urban and rural.

While the high-frequency indicators suggest minor improvement in growth prospects, the strength and rally of the recovery seem uncertain for now, Bajoria cautioned.