By: Dharmakirti Joshi, Chief Economist, Crisil Limited on GDP data

March 1st 2025

Growth back to trend

The mild revision of 10 basis points (bps) in the second advanced estimates to 6.5% takes the expected real GDP growth this fiscal closer to the average of 6.6% seen in the decade pre-pandemic. And this is over a sharp upward revision of 100 bps in the previous year’s growth to 9.2%.

We expect the GDP growth at 6.5% next fiscal, supported by normal monsoons, lower food inflation and rate cuts of 75-100 basis points in the current cycle that began earlier this month. However, a lower fiscal impulse is expected to cap growth next year.

The good news is growth is becoming more balanced as private consumption’s share in GDP rose in fiscal 2025.

However, investment’s share has been moderating since fiscal 2024. As anticipated, public and household investments were the faster-growing investment components in fiscal 2024. However, private corporate investment share in total investments fell.

The financial flexibility and low leverage that corporates enjoy is yet to translate into healthy investments. The ongoing tariff wars and fear of dumping from China keeps the corporate sector cautious on investments.

On the other side, gross domestic savings as a proportion of GDP remained stagnant. While household gross financial savings (as % of GDP) rose, their savings in physical assets fell in fiscal 2024.

The complexity of risks from tariff actions – already initiated and likely to be followed by more such measures in the coming months – is evolving and creates a downside bias to our forecasts.