India's fourth-quarter GDP figures have been unveiled, showcasing an impressive real GDP growth rate of 7.4% for Q4 of FY 2024-25, indicating a path of persistent economic growth. However, on an annual basis, the real GDP for the fiscal year 2024-25 stood at a resilient 6.5%, marking a four-year low.
Exceeding Growth Predictions
From January to March, India's GDP growth rate reached 7.4%, a significant improvement over the forecasted 6.85%. This quarterly increase from the previous Q3 FY25 growth rate of 6.2% to 7.4% highlights the robust performance of the economy, driven by strong domestic demand, sustained investments, and thriving agricultural output.
Spectacular Nominal GDP Growth
Compared to the previous year, the nominal GDP surged by 9.8% to ₹330.68 lakh crore. Additionally, the real GDP at constant prices climbed to ₹187.97 lakh crore. In Q4 alone, nominal GDP saw a remarkable growth of 10.8%, reaching ₹88.18 lakh crore.
What Fuels the GDP Surge?
Data unveiled by the National Statistical Office sheds light on the key catalysts behind this economic expansion. Leading the charge was the manufacturing sector, boasting a remarkable year-on-year growth of 9.4%, followed by robust growth in public administration, defense, and other services at 8.9%, and the financial, real estate, and business services sectors exhibiting 7.2% growth. The manufacturing sector alone witnessed further acceleration in Q4, surging to 10.8% growth.
Private consumption, an indicator of domestic demand, experienced a robust 7.2% increase over the year. Gross fixed capital formation demonstrated resilience with an annual growth of 7.1%, and a notable 9.4% in Q4. The primary sector, comprising mining, achieved a 4.4% growth rate, a marked improvement from the previous year's 2.7%. In Q4, an exceptional 5% growth was recorded, compared to a mere 0.8% in the same quarter last year.
Accelerated GVA Growth
The real Gross Value Added (GVA) increased by 6.4% year-on-year to ₹171.87 lakh crore, while nominal GVA reached ₹300.22 lakh crore, reflecting a 9.5% rise from the previous year. Estimates were compiled using various indicators, including the Index of Industrial Production, financial performance of listed companies, crop and livestock data, and tax collections. Officials suggested that improved data coverage and input revisions might lead to future adjustments.
The Reserve Bank of India (RBI), in its latest monetary policy meeting, projected a GDP growth rate of 6.6% for the entire fiscal year (FY25). For Q4 FY25, the central bank estimated a growth rate of 7.2%.
The Transformation to the Fourth Largest Economy
These GDP figures emerge at a time when Prime Minister Narendra Modi's government is aiming for India to become the fourth-largest global economy. According to the IMF, by the end of 2025-26, India is poised to surpass Japan, trailing only the United States, China, and Germany. The next GDP update for Q1 FY 2025-26 is scheduled for release on August 29th.
