Indian Economy Surpasses Q4 Growth Forecasts; Near-Term Prospects Remain Hazy

Indian Express News: The Indian economy growth with a strong 7.4 per cent growth rate during the fourth quarter of 2024-25 which exceeded what most economists predicted. The National Statistics Office has set the full year economic growth estimate at 6.5 per cent. The recent figure matches previous predictions issued by the office. The economy's value-added growth reached 6.8 per cent during the fourth quarter once product-based net taxes were subtracted. Indian economic growth decelerated considerably in 2024-25 despite experiencing rapid expansion during the latter half of the year which was preceded by a sharp slowdown to 5.6 per cent GDP growth rate in the second quarter. The nominal GDP turned out to be lower than 10 per cent. The outlook for the coming year shows little improvement in the forecasts.

The disaggregated sector data reveals agriculture's sustained healthy expansion through favorable weather and profitable prices which motivated farmers to increase their cultivated areas. After the fourth quarter growth of 5.4 per cent the sector reached a full year growth of 4.6 per cent which exceeds its long-term average. This editorial wells for rural consumption. Manufacturing difficulties led to a sharp slowdown in the industrial sector. The sector expanded at only 4.5 per cent during 2024-25 which represents a decline from the previous year's rate of 12.3 per cent. The construction sector maintained its steady growth trajectory with a 9.4 per cent expansion in 2024-25 following a 10.4 per cent increase in the previous year.

The services sector experienced a mild slowdown because trade, hotels, transport and communication along with financial services, real estate and professional services divisions expanded at diminished rates. The latest GDP statistics demonstrate that private consumption expanded by 7.2 per cent in the preceding year. The latest GDP growth figures contradict past statements from India Inc which reported weak demand and a diminishing middle class throughout the previous year. The latest data puts into question how sustainable the significant increase in investments during the fourth quarter really is since gross fixed capital formation expanded by 9.4 per cent.