India’s GDP Growth Rate in 2025

India’s GDP Growth Rate in 2025 

India’s GDP Growth Rate in 2025 –

Why in News? 

According to recently released data, India recorded a strong growth of 7.4% in real GDP during the fourth quarter. A sharp rise in growth late in the year lifted it above the annual average of 6.5%.

Key Highlights of India’s Gross Domestic Product (GDP) 2024-25

• The Government of India’s statistical department has released the preliminary GDP estimates for the financial year 2024-25.
• Real GDP:
  • The country’s real Gross Domestic Product (Real GDP) grew by 6.5% this year, rising from ₹176.51 lakh crore in 2023-24 to ₹187.97 lakh crore. This reflects inflation-free real growth.
  • In the fourth quarter of the financial year 2024-25, the real GDP growth rate was 7.4%, which is higher than the average growth rate for the entire year.
• Nominal GDP:
  • The Nominal GDP also saw a sharp jump of 9.8%. With price effects factored in, the economy expanded from ₹301.23 to ₹330.68 lakh crore over the year.
  • In the fourth quarter, the nominal growth rate reached 10.8% directly.
• Real GVA:
  • The real Gross Value Added (GVA) for 2024-25 was estimated at ₹171.87 lakh crore, approximately 6.4% higher than ₹161.51 lakh crore recorded the previous year.
• Nominal GVA:
  • The nominal GVA stood at ₹300.22 lakh crore, compared to ₹274.13 lakh crore in 2023-24, indicating a growth rate of 9.5%.
• Contribution of Different Sectors:
  • The construction sector showed the highest growth during the financial year, at 9.4%. The rapid progress in this sector has contributed significantly to employment creation.
  • The public administration, defence, and other services sector grew by 8.9%, signaling increased government expenditure and improved service delivery.
  • The primary sector showed faster growth in the fourth quarter with a 5.0% increase, compared to only 0.8% in the same quarter of the previous year.
  • Private Final Consumption Expenditure (PFCE) also recorded a boost, with a 7.2% increase this year compared to 5.6% earlier, indicating improvement in domestic consumption.
  • Gross Fixed Capital Formation (GFCF) showed strength as well, with a 7.1% growth for the financial year, and the growth rate in the fourth quarter rose further to 9.4%.

Assessment Methods and Indicators for GDP Calculation in Financial Year 2024-25

• Method:
  • GDP calculation for the current year was done using the Benchmark-indicator method.
  • This method estimates the economy’s pace by taking the first revised estimates of the previous year as the base and applying relevant sectoral indicators.
  • The objective is to ensure that the real economic activity of every sector is accurately reflected in the data.
• Indicators:
  • Index of Industrial Production (IIP): This data shows the increase or decrease in production capacity of industries.
  • Financial results of listed companies: Quarterly earnings and profits of companies are used to estimate economic activity in the private sector.
  • Second advance estimates of crop production: This indicator assesses the productivity of the agriculture sector.
  • Production data related to mining and construction: Includes consumption figures of coal, crude oil, natural gas, cement, and steel.
  • Railway transport: Freight and passenger transport data estimate logistics activities.
  • Air traffic and port activities: Data on cargo movement and commercial mobility are included.
  • Commercial vehicle sales: This is a key indicator reflecting the intensity of economic activities.
  • Banking sector: Deposits and loan data are used to assess the financial sector’s activity.
  • Insurance sector: Life and non-life insurance premiums indicate expenditure and income in the service sector.
  • Taxes on products have been included.
  • The government’s final consumption expenditure is assessed based on revenue expenditure, interest payments, and various subsidy expenses made by the government.

Key Economic Terminologies of the Indian Economy

• Gross Domestic Product (GDP):

• • • Gross Domestic Product is the total market value of all final goods and services produced within the borders of a country during a specific period of time.
    • GDP serves as a comprehensive measure of all economic operations within a nation.
    • GDP is calculated on a quarterly, half-yearly, or annual basis.
    • In India, this figure is prepared at the national, state, and district levels.
    • It reflects both the country’s full economic potential and how effectively it is being used.
    • Nominal GDP: Nominal GDP captures economic output using ongoing market prices, reflecting price level changes.
    • Real GDP: This is calculated on the basis of constant prices of 2011-12, removing the effect of price increases, thus showing the real economic picture.
    • GDP Growth Rate: It indicates how fast the country’s economy is growing during a particular time period.
      • In India, this growth mainly depends on private consumption, private investment, government expenditure, and the balance of exports-imports.

• Gross Value Added (GVA):

• • • GVA shows how much value addition has taken place in various sectors of the economy. It measures the total supply of production.
    • It measures the value addition in agriculture, industry, and services sectors.
    • According to the RBI, GVA = Total Output – Intermediate Consumption (such as raw materials, energy, etc.).
    • Real GVA is the economic figure from which the effect of inflation has been removed to understand the actual growth in production.
    • Nominal GVA values production at present-day prices, factoring in inflation-driven cost increases.

• Fiscal Deficit:

• • • A fiscal deficit arises when government spending surpasses its total income.
    • This shortfall means the government must rely on borrowing to fund its needs.
    • It is a sign of the country’s financial discipline and economic credibility.

• Gross National Product (GNP):

• • GNP captures the overall output by a nation’s people and firms, at home and abroad.
  • It is broader than GDP because it includes income earned internationally.
  • It helps assess the complete income and production generated by a country’s population.