Indian Households Are Spending More—Private Consumption Hits Two-Decade High In FY25

The report highlighted that the share of private consumption in nominal GDP increased from 60.2 per cent in FY24 to 61.4 per cent in FY25.

On the demand side, the growth was mainly driven by robust private consumption, stable investment activity, and an increase in net exports.

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India's private consumption has shown strong growth, reaching the highest share in the country's GDP in the past two decades, according to the latest monthly report released by the Ministry of Finance.

 

The report highlighted that the share of private consumption in nominal GDP increased from 60.2 per cent in FY24 to 61.4 per cent in FY25. This marks the second-highest level in the last 20 years, indicating sustained strength in consumption demand across the country.

 

The ministry said, "private consumption's share in nominal GDP increased from 60.2 per cent in FY24 to 61.4 per cent in FY25. This is the second-highest level in the past two decades, indicating sustained strength in consumption demand".

 

On the demand side, the growth was mainly driven by robust private consumption, stable investment activity, and an increase in net exports.

 

 

The Ministry said that private final consumption expenditure grew at a faster pace of 7.2 per cent in FY25, compared to a 5.6 per cent growth in FY24. This improvement was largely supported by a rebound in rural demand.

 

In terms of investments, gross fixed capital formation (GFCF) saw a growth of 7.1 per cent in FY25. This is slightly lower compared to the 8.8 per cent growth recorded in FY24. In nominal terms, GFCF accounted for 29.9 per cent of GDP, which is lower than the last two years but still higher than the pre-pandemic average of 28.6 per cent during FY16 to FY20.

 

The report also pointed out a positive shift in the country's external trade. Exports, measured at constant 2011-12 prices, rose by 6.3 per cent in FY25, a notable improvement from the 2.2 per cent growth in FY24. This increase comes despite ongoing global trade uncertainties, showing resilience in India's export performance.

 

On the other hand, imports declined by 3.7 per cent in FY25, in contrast to a strong 13.8 per cent growth seen in the previous year. The fall in imports further supported the overall net exports, contributing positively to economic growth.

The Ministry's report highlighted the balanced nature of India's growth drivers, with consumption, investment, and exports all playing vital roles. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)