New Delhi – India’s economy registered a growth rate of just 6.5% in the financial year 2024–25 (FY25), marking the slowest pace in the last four years. According to government data, this decline signals the sharpest post-COVID deceleration in economic momentum. The lower-than-expected figure has raised concerns among policymakers and economists alike.
Reasons Behind the Slowdown
Officials from the Finance Ministry attributed the economic dip to several key factors:
- Drop in Agricultural Output: Unfavourable weather conditions such as erratic rainfall and dry spells led to reduced crop yields, directly impacting rural consumption.
- Decline in Exports: Weak global demand hurt India’s exports, particularly in textiles, chemicals, and engineering goods.
- Sluggish Industrial Growth: A slowdown in the manufacturing and construction sectors further dragged down GDP numbers.
- Impact of Inflation and High Interest Rates: Elevated interest rates curbed both consumer spending and private investment.
Expert Reactions
Global institutions like Moody’s and the IMF have also acknowledged this downturn. Economist Anjali Verma said, “The 6.5% growth in FY25 reflects weak rural demand, tight monetary policy, and a slowdown in export earnings. This is a sharp drop from the 7.8% growth rate recorded in FY24.”
Government’s Response
Finance Minister Nirmala Sitharaman described the slowdown as a “temporary challenge.” She highlighted several measures taken to stimulate recovery:
- Acceleration of infrastructure projects
- Easier credit facilities for the MSME sector
- Expansion of crop insurance and irrigation schemes
She expressed optimism that signs of recovery may emerge in the next two quarters.
Impact on the Public
A slowing GDP growth rate can directly affect employment opportunities, consumer demand, and overall economic confidence. Experts caution that if the trend persists, it may lead to fewer job openings, especially for the youth entering the workforce, and reduced domestic consumption.
Silver Lining
While the slowdown is concerning, analysts believe India’s economic fundamentals remain strong. Continued government spending, growth in fintech, and digital infrastructure are expected to help the economy regain momentum. According to the Reserve Bank of India (RBI), the growth rate could bounce back to around 7% in FY26.
