India's Economic Growth Achieves Greater Balance with Rising Private Consumption
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Synopsis
India's growth is achieving a more balanced state as private consumption's contribution to GDP increases, according to a Crisil report. The GDP growth forecast for fiscal 2024-25 is estimated at 6.5%, with public and household investments leading the way.
Key Takeaways
- India's GDP growth forecast for fiscal 2024-25 is 6.5%.
- Private consumption's share in GDP is increasing.
- Public and household investments are growing rapidly.
- Corporate sector remains cautious due to tariff wars.
- Fiscal deficit for April-January stands at Rs 11.70 lakh crore.
New Delhi, March 2 (NationPress) The positive development is that India’s economic growth is becoming increasingly balanced as the share of private consumption in GDP has risen during fiscal 2025, according to a report by Crisil.
The slight adjustment of 10 basis points (bps) in the second advanced estimate to 6.5 percent brings the anticipated real GDP growth for this fiscal year closer to the average of 6.6 percent recorded in the decade preceding the pandemic.
“This follows a substantial upward revision of 100 bps in last year’s growth to 9.2 percent,” stated Dharmakirti Joshi, Chief Economist at Crisil.
“We forecast GDP growth at 6.5 percent in the upcoming fiscal year, bolstered by normal monsoon conditions, reduced food inflation, and anticipated rate cuts of 75-100 basis points in the current cycle that commenced earlier this month,” he added.
As expected, public and household investments emerged as the fastest-growing investment segments in fiscal 2024.
Despite the financial flexibility and low leverage enjoyed by corporates, these advantages have yet to materialize into substantial investments.
The ongoing tariff disputes and concerns regarding dumping from China continue to make the corporate sector hesitant about investing.
“The intricacies of risks stemming from tariff actions – which have already commenced and are likely to be followed by additional measures in the coming months – are evolving and contribute to a downside bias in our forecasts,” Joshi remarked.
The GDP growth accelerated to 6.2 percent in the third quarter (October-December) of 2024-25, an increase from the revised figure of 5.6 percent in the second quarter of the financial year.
The growth rate for the fiscal year 2024-25 is now projected at 6.5 percent, while the economic growth for 2023-24 has been revised to a 12-year high of 8.2 percent.
Meanwhile, the fiscal deficit for the first 10 months of the current financial year (April-January) stood at Rs 11.70 lakh crore or 74.5 percent of annual estimates.
