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Despite a slowdown in real GDP growth and stagnant nominal GDP growth, per capita nominal GDP is expected to rise significantly in FY25, according to a report by the State Bank of India (SBI).
The report highlighted that per capita nominal GDP in FY25 is estimated to be nearly Rs 35,000 higher than in FY23. This growth is seen as a positive development even as the broader GDP growth decelerates. It said, "While the real GDP growth decelerated sharply and nominal GDP growth is almost stagnant, the per capita nominal GDP is expected to increase significantly. Compared to FY23, the NSO estimate of per capita GDP in FY25 is almost Rs 35,000 more". The National Statistical Office (NSO) in its first advance GDP estimates, pegged India's real GDP growth at 6.4 per cent for FY25. The report highlighted that the private consumption has emerged as a key driver of economic growth, registering the highest growth of 7.3 per cent in real terms in FY25. On a per capita basis, private consumption increased by 6.3 per cent, reflecting a robust recovery in consumer spending. Interestingly, the per capita Private Final Consumption Expenditure (PFCE) growth of 6.3 per cent surpassed the per capita GDP growth of 5.3 per cent. The report noted that this trend suggests a shift in household financial behavior. The higher consumption growth relative to income indicates that households may have dipped into their savings to sustain spending levels. "Private consumption appears to have been financed by a net drawdown in savings in FY25," the report stated. The findings highlight the resilience of India's consumption-driven economy even amid challenges. However, the report also raised questions about the sustainability of this trend, particularly if savings levels continue to decline. It added "the per capita PFCE growth is higher than per capita GDP growth at 5.3 per cent. At the face of it, if this is true then private consumption has been financed by net draw down in savings in FY25". The SBI report provided crucial insights into India's economic trajectory, emphasizing the importance of individual economic indicators like per capita income and consumption in shaping the broader narrative of growth. (ANI)
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