GDP Numbers vs Reality: Is India’s Growth Story on Shaky Ground?

With India's failure to attain $5 trillion GDP goal, $10 trillion by 2035 will be tough, notes Subhash Chandra Garg.

What do the 2022-23, 2023-24, and 2024-25 GDP growth performance mean in terms of India’s ambition of attaining its goal of $5 trillion GDP by 2024-25, $10 trillion GDP by 2035, and Viksit Bharat by 2047 or 2050?

(Photo: Namita Chauhan/The Quint)

The February-end estimates of the gross domestic product (GDP) and related data – released by the Ministry of Statistics and Programme Implementation (MoSPI) – are extensive, and quite significant for assessing the health of the Indian economy.

The MoSPI press release provided the GDP data for the third quarter (October-December) of FY2024-25, the Second Advance Estimates (SAE) of the GDP for FY2024-25, the First Revised Estimates (FRE) of the GDP for FY2023-24, and the Final (F) GDP Estimates for FY2022-23.

A massive upward revision (by a full one percentage point) for the 2023-24FRE GDP (from 8.2 percent to 9.2 percent) is the most conspicuous number — not only in terms of the extent of revision, but also for judging the health of the Indian economy growing at this spectacular rate in 2023-24. There was also an upward revision in 2022-23F GDP.

While 2024-25Q3 GDP growth of 6.2 percent is not that impressive, it did provide some comfort after the disappointingly low 5.4 percent GDP growth in the second quarter of FY2024-25. MoSPI has since revised the 2024-25Q2 GDP growth to 5.6 percent, and projected 2024-25SAE GDP growth at 6.5 percent — which implies a tough task of 7.4 percent growth in the fourth quarter of FY2024-25.

What is behind the unusually large upward revision in 2023-24FRE GDP growth of 9.2 percent? Is this realistic or there's a catch? Will the 2024-25 GDP growth come out at 6.5 percent or fall short?

What do the 2022-23, 2023-24, and 2024-25 GDP growth performance mean in terms of India’s ambition of attaining its goal of $5 trillion GDP by 2024-25, $10 trillion GDP by 2035, and Viksit Bharat by 2047 or 2050?

2023-24: Impressive Growth with Uncomfortable Questions

The 2023-24 provisional estimates (PE) released in May 2024 estimated the year’s GDP at Rs 173.81 trillion and recorded a robust growth of 8.2 percent over GDP of Rs 160.71 trillion in 2022-23FRE.

The 28 February press release has increased this figure to Rs 176.51 trillion in the first revised estimates. That's an increase of Rs 2.69 trillion or by 1.55 percent over 2023-24PE GDP. However, as the government also revised 2022-23FRE GDP upward by Rs 93,484 crore, the additional growth in 2023-24FRE GDP effectively amounts to Rs. 1.73 trillion or about 1 percent higher, raising growth from 8.2 percent to 9.2 percent.

The 2023-24 GDP growth of 8.2 percent was excellent. The GDP growth of 9.2 percent for 2024-25 is certainly great.

India needs GDP growth of 8 to 10 percent for the next two to three decades to make a serious attempt to graduate to the High Income Countries (HIC) group that today starts at a little over $14,000 per capita income.

So, while we should indeed celebrate 9.2 percent GDP growth for 2023-24, there is one major issue.

While the GDP has gone up, MoSPI has revised down exports from Rs 39.49 trillion in 2023-24PE to Rs 38.25 trillion in 2023-24FRE. The difference of Rs 1.23 trillion is almost 0.7 percent of GDP. This should have normally brought down the 2023-24 GDP growth to 7.5 percent from 8.2 percent.

However, MoSPI has made an inordinately large revision in another constituent of the GDP — change in stocks (CIS), which represents increase in the stocks remaining unsold at the end of the year.

The CIS went up from Rs 1.94 trillion in 2023-24PE to Rs 3.06 trillion in 2023-24FRE — by as much as 53.4 percent. This looks, prima facie, an impossible thing to happen. Never has the CIS been revised so massively. Was the reduction in exports added to the CIS? If the CIS was not so revised, the upward revision of 1 percent would have been only 0.35 percent.

There is one more doubtful number. Discrepancies, which MoSPI could not account for, of Rs 1.49 trillion in 2023-24 is a positive number adding to the GDP, whereas discrepancies in both 2022-23FE and 2024-25SAE are negative numbers. Positive discrepancies boost up GDP, whereas negative discrepancies bring it down.

While we should feel happy about 2023-24 GDP outturn, it would be advisable to keep fingers crossed until the final GDP numbers for 2023-24 are available in February 2026.

Doubts Over 2024-25 Projections

MoSPI has estimated 2024-25SAE GDP at Rs 187.95 trillion, projecting growth of 6.5 percent over 2023-24FRE.

The reduction of GDP growth from 9.2 percent in 2023-24FRE to 6.5 percent in 2024-25SAE is sobering. There is one major uncertainty in this projected growth as well to make the matter worse.

India’s GDP has recorded growth of 6.5 percent, 5.6 percent, and 6.2 percent in first three quarters of 2024-25. As 2024-25SAE GDP has been estimated at Rs 187.95 trillion and first three quarters the GDP aggregate to Rs 136.51 trillion, 2024-25Q4 GDP has to be Rs 51.44 trillion.

Since the 2023-24Q4 GDP is Rs 47.82 trillion, 2024-25Q4 GDP will have to grow at 7.57 percent.

Considering the record of growth in the first three quarters, the state of the economy and what the leading indicators for January and February 2025 indicate, generating growth of 7.57 percent in 2024-25Q4 looks an almost impossible ask.

India’s 2024-25Q4 GDP growth is likely to be 6.5 percent plus or minus 0.2 percent. A 6.5 percent growth in 2024-25Q4 will reduce 2024-25PE GDP to Rs 187.44 trillion and GDP growth to 6.2 percent. This growth will mean a full 3 percent reduction in the GDP growth from 2023-24 to 2024-25.

Considering India’s still growing population, low per capita income (about $2,700), high incidence of poverty and people’s potential, GDP growth of less than 3 percent is no growth, between 3 percent and 5 percent slow growth, between 5 percent and 6.5 percent low growth, between 6.5 percent and 8 percent medium growth, and between 8 percent to10 percent high growth.

In this context, 6.2 percent GDP low growth in 2024-25 is not a very pleasing prospect.

A Sobering Reality 

MOSPI has projected Gross Value Added (GVA) growth of 5.4 percent in 2024-25Q3. This is quite low — and on top of another very low GVA growth of 2.9 percent in 2024-25Q2. Manufacturing GVA growth in 2024-25Q3 is also a very disappointing 3.5 percent.

On expenditure side, while consumption growth at 6.9 percent indicates satisfactory normalisation, estimated growth of 5.7 percent in 2024-25Q3 for Gross Fixed Capital Formation (GFCF) is quite underwhelming.

GVA, manufacturing, and GFCF growth trends and the momentum in 2024-25 are certainly causes of concern.

MoSPI has revised the 2022-23 GDP, in constant prices, from Rs 160.71 trillion in 2022-23FRE to Rs 161.65 trillion in 2023-24FE, improving GDP growth from 7.0 percent to 7.6 percent. In nominal prices, however, the 2022-23 GDP of Rs 269.49 trillion in 2022-23FRE has been revised down somewhat to Rs 268.90 trillion, marginally bringing down the growth rate.

It is curious to see the final revision of 2022-23 GDP growth moving in opposite directions at constant and nominal prices.   

Viksit Bharat: A Distant Vision Amid Slower Growth

India’s projected GDP of Rs 331.03 trillion in 2024-25SAE, at Rs 87.25 to a dollar, results in US dollar GDP of $3.79 trillion.

The government had set the $5 trillion GDP goal in 2019 to be achieved in six years by 2024-25. India’s GDP was $2.7 trillion in 2018-19.

In six years, India is generating $1.1 trillion of additional annual GDP, less than half of the $2.3 trillion gap to $5 trillion. It is quite a pathetic performance. It is almost certain that India would take at least another three years to touch $5 trillion mark. It might take longer. Therefore, $5 trillion GDP goal is still far away.

In line with failure to attain $5 trillion GDP goal, the $10 trillion GDP by the middle of 2030s, that is, by 2035, has also moved further apart. In the absence of any clear growth strategy, India is unlikely to achieve the $10 trillion goal even by 2040.

Viksit Bharat in simple words means India entering into the HIC group. That is a very tough call at this moment. Viksit Bharat by 2047 or 2050 will remain an empty banter in the face of our record of serious inability to move closer to attainting even $5 trillion GDP.

(Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, We Also Make Policy, and Explanation and Commentary on Budget 2024-25'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)