Provisional GDP Estimates

The Ministry of Statistics and Programme Implementation (MoSPI) released Provisional Estimates (PEs) of Gross Domestic Product (GDP) and Gross Value Added (GVA) for FY2024-25. These estimates indicate a deceleration in both nominal and real GDP growth, revealing critical trends in sectoral performance, especially manufacturing, ahead of the final estimates in subsequent years.

Definitions and Concepts:

• GDP (Gross Domestic Product): Measures the total monetary value of all final goods and services produced within a country in a given year, including taxes minus subsidies.
• GVA (Gross Value Added): Captures the value added by each sector in the economy before the inclusion of taxes and deduction of subsidies.
• Relation: GDP=GVA+Net Taxes (Taxes – Subsidies)\text{GDP} = \text{GVA} + \text{Net Taxes (Taxes – Subsidies)}GDP=GVA+Net Taxes (Taxes – Subsidies)
• Nominal GDP: Calculated at current market prices, includes inflation.
• Real GDP: Adjusted for inflation, represents actual increase in production.
• Provisional Estimates (PEs): Based on data up to Q4; subject to revisions as more complete data becomes available over the next two years.

Key Figures from FY2024-25:

• Nominal GDP: ?330.7 lakh crore (USD $3.87 trillion using ?85.559/$ exchange rate)
  • Growth: 8% YoY — Third slowest since 2014; Sixth slowest since 1991 economic liberalisation.
• Real GDP: ?188 lakh crore
  • Growth: 5% YoY — down from 9.2% in FY24
• Real GVA Growth: 4% vs 8.6% in FY24
  • Agriculture CAGR (since 2019-20): 72%
  • Manufacturing CAGR: 04%
  • Service Sector CAGR: Below 6%

Sectoral Insights and Concerns:

• Manufacturing growth lags behind agriculture, a cause for concern amid persistent urban unemployment, particularly among youth.
• Weak manufacturing output contradicts the ambitions of the Make in India initiative (2016).
• Structural weaknesses in the industrial base are evident, suggesting a lack of sustained momentum in job-creating sectors.

Implications for Fiscal and Monetary Planning:

• Declining real growth with high nominal base suggests mild inflationary pressure.
• Revision of estimates (First Revised in 2026, Final in 2027) may alter fiscal strategy, affecting projections for budget deficit, taxation, and investment planning.