India's Economic Growth Forecast for FY25

India's economy is projected to grow at a rate of 6.4% in the financial year 2024-25, marking a significant slowdown from the previous year's 8.2% growth. This deceleration is attributed to a moderation in manufacturing and sluggish investment, despite robust growth in the agricultural sector providing some support to rural consumption.

Sector-wise Growth Projections

Manufacturing growth is expected to slow down to 5.3% from 9.9% in the previous year, while the services sector is anticipated to expand at 7.2%, slightly down from 7.6%. However, the agricultural sector remains a bright spot with a projected growth of 3.8%, up from 1.8% in the previous year. The construction sector also shows resilience with an 8.6% growth rate.

Impact on Consumption and Investment

Private final consumption expenditure (PFCE) at constant prices is estimated to grow by 7.3% this fiscal year, a significant increase from the 4% rise last year. PFCE represents the total spending by households and non-profit entities on goods and services. The slowdown in investment and consumption in urban areas has been a key factor in the overall economic deceleration.

Looking Ahead

With the upcoming February 1 Budget, there is anticipation for measures to revive demand and stimulate growth amidst global uncertainty and geopolitical tensions. Additionally, expectations of a rate cut by the Reserve Bank of India in the February policy meeting are high, as the economy seeks to navigate through these challenging times.