India FY25 GDP growth – 1st Advance Estimates
The first advance estimates peg India’s FY25 GDP growth at 6.4% YoY, down from 8.2% YoY in FY24 and below the RBI’s latest projection of 6.6% YoY.
The manufacturing sector drags down GDP growth in FY25. Growth in the manufacturing sector moderates due to a decline in the operating profit growth of listed manufacturing firms and weaker IIP manufacturing growth. Growth in the services sector also slows marginally, largely due to weak financial services. The agriculture sector, however, posts a recovery on account of a healthy monsoon and robust kharif production.
Private consumption growth recovers due to strong rural demand, while urban consumption lags. Fixed investment growth, however, moderates due to weak central government capital expenditure. Net exports (exports – imports) make a positive contribution to GDP growth in FY25.
Nominal GDP growth remains flat at 9.7% YoY despite weak real GDP growth due to a rise in the GDP deflator (inflation). However, nominal GDP growth falls short of the budget projection of 10.5% YoY.
We expect FY26 GDP growth to be around 6.5% YoY. Downside risks include subdued urban consumption, weak government capital expenditure, and trade-war escalations. Upside factors comprise a pickup in private capital expenditure and fiscal stimulus.
