India has projected an economic growth rate of 6.4% for the fiscal year 2024/25, marking its slowest pace in four years and falling below the previously anticipated range of 6.5%-7%. This slowdown is attributed to weaker manufacturing and reduced corporate investments. The National Statistics Office’s forecast follows disappointing economic indicators in late 2024, including low growth, high inflation, low capital flows, and a record trade gap. The Reserve Bank of India had earlier revised its growth forecast for the year ending March 2025 from 7.2% to 6.6%. Despite these setbacks, the economy is expected to revive somewhat in the latter half of the year, although the outlook remains cautious due to weaker investments and inflation eroding consumer purchasing power.
Private consumption and government spending are projected to rise, but private investment growth is slowing. Sectoral growth will see a boost from farm output, while manufacturing and construction growth rates are set to decline from the previous year. Experts suggest there may be further downward pressure on the economic forecast. The central bank attributes the growth slowdown to inflation, while government reports hint that monetary policy stances have also contributed to demand slowdowns.
