ICRA pegged real growth at 6.2%, and nominal GDP at 9.5% in FY25

India’s growth story: The Indian economy is estimated to grow at 7 per cent, as estimated by the Reserve Bank of India. However, assuming a normal monsoon and the sustenance of healthy momentum in domestic demand, credit rating agency ICRA projected India’s GDP growth in FY25 at 6.2 per cent, a shade lower than our estimate of India’s medium-term potential growth of 6.5 per cent. 

Nominal GDP Growth

According to ICRA, notwithstanding a likely moderation in real growth, the YoY expansion in nominal GDP is anticipated to increase slightly to 9.5 per cent in FY2025 from 8.7 per cent expected for FY2024, on the back of a modest reversal in the trend for WPI to inflation in the fiscal (to +2 per cent to +4 per cent in FY2025 from -0.3 per cent in FY 2024), even as the CPI inflation is expected to soften, compared to FY2024. 

For budgetary analysis, ICRA has used the NSO’s First Advance Estimates (FAE) for a nominal GDP of Rs 296.6 trillion for FY2024 and our projection of Rs 324.4 trillion for FY2025. 

Growth in FY24

The RBI estimated India’s growth at 7 per cent in FY24. On the other hand, the First Advance Estimate of GDP growth by the National Statistical Office expected India’s growth at 7.3 per cent, higher than what was estimated by the apex bank.  ICRA pegged real GDP growth for FY24 at 6.5 per cent and nominal GDP growth at 8.7 per cent.