Centre pegs FY25 GDP growth at 6.4% in 1st Advance Estimate

The central government on Tuesday released the first advance estimate for the current financial year, pegging real gross domestic growth at 6.4 per cent in a sharp decline from 8.2 per cent the previous year. That marks the lowest annual growth rate in four years impacted by the manufacturing and services sectors.

The latest estimate, also lower than the finance ministry's initial forecast of 6.5-7 per cent, comes days before the Finance Minister is set to unveil the Union Budget for the next financial year.

The outputs of the manufacturing and services sectors are now estimated to grow 5.3 per cent and 5.8 per cent, in sharp contrast to the growth rates of 9.9 per cent and 6.4 per cent recorded in the previous year, respectively. 

As per the latest estimate, growth in the agriculture sector is pegged at 3.8 per cent, better than 1.4 per cent in the previous financial year.

Earlier, the government exuded confidence that economic growth may pick up in the second half of the financial year after GDP growth hit a seven-quarter low of 5.4 per cent in July-September. 

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The Economic Survey projected the country's GDP to expand at 6.5-7 per cent in 2024-25.

In December, the central bank cut its GDP forecast for the current financial year to 6.6 per cent, with 6.8 per cent in the fiscal third quarter followed by 7.4 per cent in the final quarter. 

For the next financial year, which begins on April 1, 2025, the RBI pegs GDP growth at 6.9 per cent in the first quarter (April-June) and 7.3 per cent in the next (July-September). 

While MPC took note of the slowdown in the growth momentum, then RBI Governor Shaktikanta Das mentioned that high frequency indicators appeared to be hinting at a bottoming out of domestic economic activity.

ALSO READ: RBI revises FY25 GDP forecast to 6.6% from 7.2%, says growth may gain momentum from now on

Das pointed out that going into the second half of the current financial year and the next year, the MPC has "assessed the growth outlook to be resilient but warranting close monitoring". Read Shaktikanta Das's December 6 speech

The first MPC review under the current RBI Governor Sanjay Malhotra is due in February.