Growing pains

• Q4 growth of 7.4% was higher than expected, the fastest in an otherwise dismal financial year.

• The main drivers were the construction sector returning to double-digit growth and the agriculture sector showing strong performance.

• Services continued to grow steadily, while the manufacturing sector grew at 4.8%.

• The GDP growth rate of 7.4% was achieved largely due to a 12.7% growth in net taxes, a statistical boost that would have resulted in growth in actual economic activity at around 6.8%.

• The ‘Maha Kumbh effect’ on consumption expenditure did not materialize, with growth in Private Final Consumption Expenditure at 6%.

• Capital formation grew a robust 9.4% as the government sped up its sluggish capital investments.

• Government officials and Union Ministers expressed satisfaction at the 6.5% growth in 2024-25, the slowest since the pandemic.

• The Modi government’s aspirations for a ‘Viksit Bharat’ by 2047 require sustained economic growth of close to 8% every year for at least a decade.

• The government needs to consider whether this is a satisfactory situation for a transitioning economy.