Description

The Ministry of Statistics and Programme Implementation (MoSPI) has released crucial economic data, including estimates for the fourth quarter and provisional figures for the full financial year 2024–25.

Understanding National Income Metrics

India’s national income is primarily assessed using two indicators: Gross Domestic Product (GDP) and Gross Value Added (GVA).

• GDP reflects the total expenditure within the economy, encompassing consumption by households, investments by businesses, and public spending by the government.

• GVA, on the other hand, evaluates the actual contribution of each sector by measuring value addition during production processes.

These metrics are interrelated, and the equation linking them is:
GDP = GVA + (Taxes – Subsidies).

Real vs Nominal GDP

MoSPI provides GDP and GVA data in both nominal (current price) and real (inflation-adjusted) terms.

• Nominal GDP gives a snapshot of the economy based on existing market prices.

• Real GDP reflects actual production by removing the impact of inflation.

Estimates are released in stages beginning with the First Advance Estimates (FAEs), followed by Second Advance Estimates (SAEs), and concluding with Provisional Estimates (PEs), which are refined over time.

Economic Highlights For FY 2024–25

India’s nominal GDP reached ?330.7 trillion by the end of March 2025, marking a 9.8% increase over the previous fiscal year. In dollar terms, this amounts to approximately $3.87 trillion. Despite the increase, this is the third-slowest annual growth since 2014 and the sixth-slowest since the economic reforms of 1991.

In contrast, real GDP a better measure of actual economic output grew by 6.5%, touching Rupees 188 trillion. This is a decline compared to the 9.2% growth recorded in FY24, highlighting the inflationary impact on the economy.

GVA And Sector-Wise Trends

For FY25, the real GVA saw a 6.4% growth, down from 8.6% the previous year. Analysis reveals that none of the major sectors agriculture, industry, or services have consistently achieved a growth rate of 6% or more since FY 2019–20.

The manufacturing sector has been particularly sluggish, recording a Compound Annual Growth Rate (CAGR) of just 4.04%, which is lower than agriculture’s 4.72% over the same period. The sector’s underperformance has led to higher unemployment, especially among the urban youth, many of whom are now turning to agriculture for livelihoods.

Policy Response And Strategic Focus

To revive industrial growth, the Government of India continues to push initiatives like ‘Make in India’, introduced in 2016, to bolster the manufacturing sector. As India seeks to position itself in the global economic race competing with giants like the US, China, and Europe revitalizing domestic production capacity remains a critical economic imperative.

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