GDP growth to hit 4-yr-low of 6.4% in FY25: Govt estimate

How economic policy responds to these numbers will be seen in the Union Budget which is due on February 1 and the next Monetary Policy Committee (MPC) meeting of RBI which is scheduled from February 5-7. The former will decide the broad direction of fiscal policy and the latter will decide whether monetary policy finally makes an effective pivot and starts cutting interest rates. This will provide relief to households with mortgage payments as well as lower the cost of new investment.

The National Statistical Office (NSO) released the first advanced estimates of GDP for the fiscal year 2024-25 on Tuesday projecting a GDP growth of 6.4% . This number was 7% and 8.2% in 2022-23 and 2023-24. The 2021-22 GDP growth of 9.7% is misleading because it came on the back of a -5.8% number in 2020-21.

While the latest GDP growth estimate is in line with the 6.4% forecast by a Bloomberg poll of economists, it is significantly lower than institutional forecasts at the beginning of the fiscal year. The 2023-24 Economic Survey -- it was presented along with the Union Budget in July 2024 -- for example, projected a GDP growth of 6.5% to 7% for 2024-25.