India’s Economic Growth and National Income Analysis
The Ministry of Statistics and Programme Implementation (MoSPI) recently released data on India’s economy. This data includes estimates for the fourth quarter of the financial year 2024-25 and provisional estimates for the entire year.
Measuring National Income
National income is quantified primarily through two metrics – Gross Domestic Product (GDP) and Gross Value Added (GVA). GDP reflects total expenditures in the economy. This includes spending by individuals, governments, and businesses. In contrast, GVA assesses the contribution of each economic sector by calculating the value added at each production stage. Both GDP and GVA are interconnected. They provide complementary views of economic performance. The relationship can be expressed as follows – GDP equals GVA plus taxes minus subsidies.
Nominal and Real GDP
MoSPI presents GDP and GVA in both nominal and real terms. Nominal GDP is measured at current prices, while real GDP adjusts for inflation. Each type offers unique analytical insights. Provisional estimates are subject to revisions over the years. Initial estimates are released as First Advance Estimates (FAEs) and later updated to Second Advance Estimates (SAEs) and Provisional Estimates (PEs).
Key Economic Data for FY25
India’s nominal GDP reached ₹330.7 trillion by March 2025, showing a growth of 9.8% from FY24. When converted to US dollars, this amounts to approximately $3.87 trillion. This growth rate marks the third-slowest since 2014 and the sixth slowest since economic liberalisation in 1991. Real GDP, which reflects actual production, grew by 6.5% to ₹188 trillion. This represents decline from the previous year’s growth of 9.2%. The gap between nominal and real GDP marks the impact of inflation on the economy.
Sectoral Analysis of GVA
GVA is crucial for understanding sectoral performance. For FY25, real GVA grew by 6.4%, a decrease from 8.6% in FY24. None of the primary sectors—agriculture, industry, and services—have maintained a growth rate close to 6% since 2019-20. Manufacturing has been particularly sluggish, with a CAGR of 4.04%, which is lower than agriculture’s 4.72%. This trend contributes to rising unemployment, especially among urban youth, leading many to return to rural areas for agricultural work.
Challenges and Government Initiatives
Boosting manufacturing growth remains a priority for the Government of India. The Make in India initiative, launched in 2016, aims to strengthen this sector. With global competition intensifying, particularly among the US, Europe, and China, enhancing manufacturing capabilities is essential for India’s economic future.
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