Introduction
India’s economic growth outlook for 2024-25 has seen significant revisions. At the start of the fiscal year, agencies projected an impressive 8% growth in real Gross Domestic Product (GDP), building on the strong 8.2% expansion in 2023-24. However, as the year progressed, these expectations were revised downward due to weaker-than-expected GDP growth in the June and September quarters of 2024. By January 2025, the average GDP growth forecast by 25 agencies had fallen to 6.4%, down from 6.6% in the previous month. The median forecast was also trimmed by 10 basis points to 6.4%.
Factors Behind the GDP Growth Revision
A key factor behind the lowered expectations is the sluggish performance of the industrial sector. While some forecasters remain optimistic about a recovery fueled by government initiatives, others see the services sector and agriculture playing a more significant role in driving growth.
Between January and February 2025, the average growth forecast across 10 agencies remained steady at 6.4%, with the median rising slightly to 6.5%. This stabilization suggests that GDP growth expectations for 2024-25 are settling around the 6.5% mark—a notable slowdown compared to the 7% or higher growth rates seen in previous fiscals.
RBI’s Economic Outlook
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) forecasts India’s real GDP growth at 6.7% for 2025-26. According to the RBI, this growth will be supported by:
- Rising household consumption
- Improved fixed investments
- Strong services exports
However, the RBI has also warned of global economic headwinds and the potential moderation of government spending that could weigh on growth.
Survey of Professional Forecasters
In January 2025, the RBI’s Survey of Professional Forecasters lowered its median GDP growth projection for 2024-25 by 50 basis points to 6.3%. The survey, which included 46 forecasters, showed a range of projections between 5.5% and 6.8%. The median forecast for 2025-26 was slightly higher at 6.5%.
Key Insights from the Economic Survey
The Economic Survey for 2024-25 expects rural demand to be a key driver of consumption in the latter half of the fiscal year, while urban demand presents mixed signals. It also anticipates an uptick in investment activity, backed by increased public capital expenditure and improved business sentiment. The survey projects India’s real GDP growth to be between 6.3% and 6.8% for 2025-26.
GDP Growth Projections from Multilateral Agencies
In January 2025, multilateral institutions like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) projected India’s GDP growth at 6.5% for 2024-25. The IMF cited weak industrial activity as a key reason for the slowdown and expects the same 6.5% growth rate to persist in the following fiscal year. The World Bank remains optimistic about the services sector and expects a boost in manufacturing due to government reforms. It also foresees an increase in private consumption, driven by a stronger labor market, expanding credit, and declining inflation.
Divergent Forecasts Across Agencies
Of the 25 agencies that released growth projections for India, 19 expect GDP growth to be at most 6.5% in 2024-25.
- At the lower end of the spectrum, Nomura and the Centre for Monitoring Indian Economy (CMIE) forecast GDP growth at 6%, while Goldman Sachs projects a similar figure for the calendar year 2024.
- On the higher end, the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD) estimate a 6.8% growth rate.
- Deloitte India, Bank of Baroda, and S&P Global Ratings present an average projection of 6.7%.
Summary of Growth Projections for 2024-25
| Agency/Institution | Growth Projection (%) | Change from Previous Forecast |
|---|---|---|
| OECD | 6.8 | Up |
| UNCTAD (CY 2024) | 6.8 | Up |
| Bank of Baroda | 6.6-6.8 | Down |
| Deloitte India | 6.5-6.8 | Down |
| S&P Global Ratings | 6.7 | Down |
| Confederation of Indian Industry (CII) | 6.4-6.7 | Down |
| ICRA | 6.5 | Down |
| Barclays | 6.5 | Down |
| Asian Development Bank (ADB) | 6.5 | Down |
| International Monetary Fund (IMF) | 6.5 | Down |
| World Bank | 6.5 | Down |
| J.P. Morgan (CY 2024) | 6.4 | Down |
| Citi Bank | 6.4 | Down |
| Fitch Ratings | 6.4 | Down |
| Crisil | 6.4 | Down |
| DBS | 6.3 | Down |
| Morgan Stanley | 6.3 | Down |
| UBS India | 6.3 | Down |
| SBI | 6.3 | Down |
| RBI Survey of Professional Forecasters | 6.3 | Down |
| Goldman Sachs (CY 2024) | 6.0 | Down |
| Nomura | 6.0 | Down |
| CMIE | 6.0 | Down |
Conclusion
India’s GDP growth projections for 2024-25 have seen a downward revision, primarily due to sluggish industrial performance. However, optimism remains in sectors like services and agriculture, with forecasts stabilizing around the 6.5% mark. While the RBI and government agencies expect moderate growth in the coming years, external economic conditions and policy measures will play a crucial role in shaping India’s economic trajectory.
Disclaimer
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to conduct their own research or consult with a financial expert before making any economic or investment decisions.