First advance estimate of GDP for this fiscal surprises on the downside

Key takeaways

• The National Statistical Office’s (NSO) first advance estimate (FAE) for this fiscal projects India’s real gross domestic product (GDP) growth at 6.4%¹, significantly slower than the 8.2% last fiscal
• Weak investments amid reduced government capital expenditure (capex) are the primary reason for the deceleration. However, private consumption is expected to rise significantly after last fiscal’s weak show
• Based on the FAE, GDP growth should pick up in the second half, registering a 6.8% rise compared with 6.0% in the first half. Consumption is expected to improve in the second half, but not investment
• Even as real GDP moderated this fiscal, nominal GDP has inched up to 9.7% from 9.6% previous year. Rising GDP deflator (3.2% vs 1.3% in fiscal 2024) is behind the uptick in nominal GDP. WPI inflation has picked up considerably this fiscal (2.1 % in April-November vs -1.3% in the corresponding period last fiscal). This, in turn, has driven the uptick in the GDP deflator this fiscal
• However, nominal GDP estimate is lower than 10.5% estimated in the Union Budget 2024-25
• The FAE is based on data for the three quarters of the year and can undergo a change if the fourth quarter surprises.

¹ Based on April-November data. An updated number is likely in May 2025