India’s GDP Growth Projected at 6.5% for FY2024-25: Second Advance Estimates

Posted by Written by Archana Rao Reading Time: 5 minutes

On February 28, 2025, India released the “Second Advance Estimates of National Income” for FY 2024-25, projecting real GDP growth at 6.5 percent for the fiscal year ending on March 31, 2025. The report also indicates that the country’s real GDP of FY2023-24 grew by 9.2 percent, the highest in 12 years, excluding the post-pandemic surge of 9.7 percent in FY 2021-22.

The National Statistics Office (NSO), under the Union Ministry of Statistics and Programme Implementation (MoSPI), has released the Second Advance Estimates (SAE) for India’s GDP in FY 2024-25. The report, released on February 28, 2025, also includes quarterly GDP estimates for Q3 (October-December) of FY 2024-25, alongside revised figures for previous years.

The latest data shows that India’s real GDP grew by 9.2 percent in FY 2023-24, marking the highest growth rate in the past 12 years, except for the post-pandemic surge in FY 2021-22 at 9.7 percent. For FY 2024–25, real GDP growth is projected at 6.5 percent. The dossier also states that in Q3 of FY 2024-25, the country’s economy expanded by 6.2 percent, driven by strong performances in key sectors.

According to the First Advance Estimates, or FAE, published on January 7, 2025, India’s GDP was projected to grow at 6.4 percent in FY 2024-25. India annually releases the SAE in the last week of February. These estimates offer the most recent official projections of India’s economic performance based on GDP.

Sectoral contributions to GDP growth

The latest SAE data highlights sector-specific performance, with manufacturing emerging as the top-performing sector in the country in FY 2023-24, achieving a robust 12.3 percent growth. This was followed by construction with 10.4 percent, while financial, real estate, and professional services grew by 10.3 percent.

India’s Sector-wise Growth Rate (%) of Real GVA

Sectors

FY2023-24

FY2024-25

Agriculture, livestock, forestry, and fishing

2.7

4.6

Mining and quarrying

3.2

2.8

Manufacturing

12.3

4.3

Electricity, gas, water supply, and other utility services

8.6

6.0

Construction

10.4

8.6

Trade, hotels, transport, communications and services related to broadcasting

7.5

6.4

Financial, real estate and professional services

10.3

7.2

Public administration, defence and other services

8.8

8.8

Source: National Statistics Office, Ministry of Statistics & Programme Implementation, GoI

Quarterly GDP trends and private consumption growth

In Q3 of FY 2024-25, real GDP reached a value of INR 47.17 trillion (US$539.55 billion), an improvement from Q2’s INR 44.44 trillion (US$508.33 billion). Nominal GDP for the same quarter expanded by 9.9 percent, amounting to INR 84.74 trillion (US$969.3 billion), reflecting stable economic momentum.

In the Indian economy, real GDP and nominal GDP are two key measures used to assess economic performance, but they differ in how they account for price changes over time.

Nominal GDP represents the total value of goods and services produced within a country in a given year, measured at current market prices. Since it is calculated using prevailing market prices during that period, it does not account for inflation or deflation. As a result, nominal GDP can increase due to higher production levels or rising prices, making it an inflated measure of economic growth.

In contrast, real GDP adjusts for changes in price levels by considering a base year’s prices. This adjustment removes the impact of inflation, providing a more accurate representation of economic growth based on actual production and output rather than price fluctuations.

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A key driver of the country’s economic growth is Private Final Consumption Expenditure (PFCE), which measures household spending. PFCE is projected to grow by 7.6 percent in FY 2024-25, up from 5.6 percent in the previous year, i.e., FY 2023-24. Industry experts view these projections as a resurgence in consumer demand, supported by higher disposable incomes and increased economic activity, particularly in urban areas.

Economic momentum and sectoral resilience

The overall economic momentum, as reflected in the latest SAE, suggests broad-based growth across multiple sectors, albeit at a more moderate pace compared to the post-pandemic rebound. Industrial and construction activity continue to be strong contributors, backed by the central government-led capital expenditure and infrastructure development. Rising consumer spending has strengthened the services sector, particularly trade, hotels, and transportation, signifying a revival in contact-intensive industries.

Challenges and risks to economic growth

While the upward revision in GDP projections is positive, several risks continue to persist in the Indian economy, such as:

  • Global uncertainties: Ongoing geopolitical tensions, supply chain disruptions, and monetary policy shifts in leading global economies may impact India’s trade and capital inflows.
  • Inflationary pressures: Persisting inflation could weigh on real consumption growth and influence interest rate decisions by the Reserve Bank of India (RBI).
  • Employment and wage growth: Despite GDP expansion, labor market conditions and wage growth trends require monitoring to ensure inclusive economic progress.

India’s GDP outlook for FY 2024-25

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India’s GDP estimates for FY 2024-25 have drawn significant attention, with economic analysts closely monitoring growth trends. Prior to the release of the SAE, various financial institutions have provided their own projections throughout February 2025.

  • SBI Research’s ‘Nowcasting Model,’ published on February 18, 2025, predicts Q3 FY 2024-25 growth between 6.2 percent and 6.3 percent, leading to an estimated full-year GDP growth of 6.3 percent. 
  • Bank of Baroda economists forecast 6.6 percent growth, citing a rebound in government spending and a moderate recovery in the manufacturing sector.
  • Similarly, ICRA, an investment information and credit rating agency, projected a 6.4% year-on-year GDP expansion for Q3, supported by strong central government expenditure, an uptick in merchandise exports, and improved rural demand.
  • Global financial services group Nomura pegs India’s FY2024-25 Q3 GDP growth at 5.8 percent, attributing stable investment levels and improved government spending but a weaker contribution from net exports.

Understanding the advance GDP estimates

In India, the financial year concludes on March 31. Any GDP projection before the conclusion of the financial year is essentially a forecast offering early insights into economic performance.

The key distinction between the SAE and the FAE lies in the inclusion of fresh data. While the FAE was based on economic performance during the first half of the year (April-September), the SAE incorporates additional information from Q3 (October-December), making them a more refined estimate.

The SAE is also accompanied by the “First Revised Estimates” (FRE) for the previous financial year. The next GDP revision will be announced in May under the Provisional Estimates (PE), followed by further refinements to become FRE by February 2026.

Conclusion

The latest SAE findings present an optimistic yet watchful outlook for India’s economy. The revised 6.5 percent growth projection aligns with expectations of a resilient economic trajectory, supported by strong industrial performance, a recovering services sector, and rising consumer demand. However, sustained policy interventions and global stability will be crucial in maintaining this momentum.

While inflationary pressures persist, as reflected in the 9.9 percent nominal GDP growth in Q3 of FY 2024–25, economic experts believe that domestic inflation remains within manageable levels, ensuring fiscal deficit targets stay aligned with projections. The estimates suggest that India’s economy is transitioning from a high-growth post-pandemic recovery phase to a more stable expansion. Strong fundamentals and resilient consumer demand continue to drive overall economic stability, laying the foundation for sustained growth in the coming years.

(US$1 = INR 87.4)

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