Key points
- Real GDP growth slowed to 6.5% in the provisional estimate, with a soft second quarter.
- CPI inflation averaged 4.6%, the lowest in six years.
- The RBI cut the cash reserve ratio in December 2024 and the repo rate to 6.25% in February 2025.
- The Nifty 50 reached a record high in September 2024 and then corrected, ending the year up 5.3%.
The year in brief
FY2024-25 began with the general election, with results declared in June 2024, and a temporary slowdown in government spending around it. Growth weakened noticeably in the July–September quarter before recovering. Real GDP grew 6.5% in the provisional estimate; under the new 2022-23 base series the figure is now 7.1%.
Inflation moved closer to target. CPI inflation averaged 4.6% for the year, with food prices the main source of volatility.
| Indicator | Value | Note |
|---|---|---|
| Real GDP growth | 6.5% | Provisional estimate, May 2025; 7.1% under the new 2022-23 base series. |
| CPI inflation, annual average | 4.6% | MoSPI / RBI |
| RBI repo rate, year-end | 6.25% | RBI |
| 10-year government bond yield, year-end | ≈6.58% | Approximate, last trading day |
| Nifty 50, year-end close | 23,519.35 | +5.3% over the year, price only |
| USD/INR, year-end | ≈85.48 | Rupee weaker by ≈2.5% |
| Central government fiscal deficit | 4.8% of GDP | Provisional actuals |
Policy and credit
A new RBI Governor took office in December 2024. The RBI cut the cash reserve ratio by 50 basis points to 4% in December to ease liquidity, and in February 2025 reduced the repo rate by 25 basis points to 6.25%, the first cut since May 2020. The fiscal deficit narrowed to 4.8% of GDP.
The Union Budget in February 2025 changed personal taxation significantly: under the new tax regime, resident individuals with taxable income up to ₹12 lakh would pay no income tax from FY2025-26 because of an enhanced rebate. This changed the old-versus-new regime comparison for many salaried taxpayers.
Markets
The Nifty 50 reached its high for the year in late September 2024 and then fell as foreign investors sold heavily and earnings growth slowed. It ended the year at 23,519.35, up 5.3%. The 10-year government bond yield fell to about 6.58% as rate cuts approached. The rupee weakened to about 85.48 per US dollar.
What it meant for businesses
Urban consumer demand softened during the year, and businesses selling to households felt the slowdown more than those selling to government or infrastructure. Borrowing costs had peaked but had not yet fallen meaningfully. For private clients, the budget changes made a fresh tax-regime comparison worthwhile.
Long-term perspective
Growth is rarely smooth even in a fast-growing economy. Three habits help businesses and households absorb a soft patch:
- Run budgets with a base case and a weaker-demand case, and agree in advance which costs would be cut first.
- Track how quickly lower policy rates actually reach your own loan rates.
- Revisit the old-versus-new tax regime choice each year rather than assuming last year's answer still holds.
Sources and method
- Ministry of Statistics and Programme Implementation (MoSPI): national accounts press releases and CPI releases.
- Reserve Bank of India: Monetary Policy Statements, Annual Reports and the Database on Indian Economy (DBIE), including the USD/INR reference rate.
- National Stock Exchange of India: Nifty 50 index closing values.
- Ministry of Finance / Controller General of Accounts: Union Budget documents and provisional accounts (fiscal deficit).
Fiscal year runs 1 April to 31 March. GDP growth is shown as first published after the year closed; later official revisions are noted in the table. Market levels are closing values on the last trading day of the fiscal year; bond yields and exchange rates are rounded. Index changes are price only and exclude dividends.