India’s GDP Growth Slows to 6.4% in 2024-25
Context:
According to the National Statistics Office (NSO), India’s real GDP is expected to grow at 6.4% in 2024-25, down from 8.2% in 2023-24.
Relevance:
GS-03 (Economy)
Key Highlights:
- Sectoral Growth:
- Agriculture is expected to grow at 3.8% (up from 1.4% last year).
- Public Administration, Defence, and Other Services to 9.1% (up from 7.8%).
- Sharp decline in the manufacturing sector to 5.3% from 9.9%.
- Slow down in mining and quarrying from 7.1% to 2.9%.
- Investment Concerns: Gross Fixed Capital Formation (GFCF), an indicator of new investments, is projected to grow by 6.4%, lower than 9% in 2023-24.
- GDP Value: Estimated at ₹184.88 lakh crore for 2024-25, up from ₹173.82 lakh crore in 2023-24.
Reasons for the Slowdown:
- Manufacturing Weakness:
-
- A sharp decline from 9.9% to 5.3% indicates:
- Reduced demand from the consumers.
- Increased input costs.
- Global slowdown impacting exports.
- Additionally, high inflation has suppressed industrial production and investments.
- A sharp decline from 9.9% to 5.3% indicates:
- Investment Slump:
- For a given economy, the Gross Fixed Capital Formation (GFCF) is an indicator of new investments in infrastructure, machinery, and other fixed assets.
- GFCF is expected to grow by only 6.4%, compared to 9% in 2023-24.
- Limited private sector participation and delays in large-scale projects have contributed to the slowdown in the GFCF.
- For a given economy, the Gross Fixed Capital Formation (GFCF) is an indicator of new investments in infrastructure, machinery, and other fixed assets.
- Global Economic Challenges
-
- Reduced demand globally after COVID-19 and geopolitical tensions, including the Russia-Ukraine conflict, have contributed immensely to affecting the supply chain.
- Due to which, export-orientated industries have been particularly affected, leading to slow industrial and manufacturing growth.
- Sectoral Imbalance:
- While agriculture and services improved, other sectors like mining and manufacturing showed significant slowdowns.
- Rising Inflation:
-
- Persistent inflation in energy and food prices has diminished the purchasing power of the consumer.
- Global Monetary Tightening
-
- The tightening of monetary policies by major economies like the US and Europe has resulted in reduced global liquidity.
- This has led to a capital outflow from emerging markets like India, pressuring the domestic economy.
Way forward:
- The government should implement targeted fiscal measures to support weak sectors like manufacturing and mining.
- More initiatives should be taken to boost private and public sector investments in those high-growth sectors.
- Must address inflation through balanced monetary policies to enhance consumer demand and industrial productivity.
Related Posts
Melting of Himalayan Glaciers
Posted onCurrent Affairs – 31st May, 2022
Posted on
