By Krishna Jha
The economy in our country has been sliding down even deeper in New Year of 2025. Data predicts further sliding to be a four year low of 6.4 per cent in 2024–25, mainly on account of a poor showing in the manufacturing and services sectors, according to government data released on January 8, 2025.
These are all symptoms of growing crisis of corporate capitalism in India. There is huge concentration of wealth and capital in a few hands led by Ambani and Adani. The small and medium enterprises that contribute maximum to national economy as well as creation of employment are in deeper crisis and are getting destroyed. This situation has emerged because India has been allowed to become a play ground for the finance capital, which is nothing but merger of banking and industrial capital. The classical procedure of the evolution of capital as defined first by Karl Marx was that a stage comes when capital takes the form of fictitious capital, that is money generated by money instead of production. It leads to poor performance of manufacturing and services sectors, while monopolization opens its wings. It leads to concentration of wealth and capital.
With the rise of finance capital, a tendency develops to go away from production into speculation. In other words capital develops a tendency to derive profits from money circulation or money from more money rather than from production and services. That is why Marx termed such capital as fictitious capital, because it is less and less available for productive investment. This leads to growing speculation.
What is even more worrisome is that many economists believe that data is manipulated and figures fudged under the Narendra Modi regime. In this situation it becomes impossible to understanding the crisis in full measure. It is, therefore, likely that the projection made in the first advance estimates of national income for 2024–25 released by the National Statistics Office (NSO) may not be the real scenario in the country. The situation may well be much worse. The government should understand that the economy needs serious remedial measures rather than data manipulation and distraction.
The first advance estimates of national income for 2024–25 released by the National Statistics Office (NSO) is lower than the 6.6 per cent projected by the Reserve Bank in December 2024. It is also quite lower than the finance ministry’s initial projection of 6.5–7 per cent. The advance estimates will be used in preparing the union budget to be presented by finance minister Nirmala Sitharaman in the Lok Sabha on February 1 and that will come with further speculation.
The economic growth slowed to a seven-quarter low of 5.4 per cent during the July–September 2024 period. It was 6.7 per cent in the first quarter (April–June). The manufacturing sector’s output is expected to decelerate to 5.3 per cent from a high of 9.9 per cent recorded in the previous fiscal, the NSO said. The services sector, comprising trade, hotels, transport and communications, is estimated to expand at only 5.8 per cent, as against 6.4 per cent in 2023–24.
So far as the farm sector spread out in the agrarian areas are concerned, it is estimated to record a growth of 3.8 per cent in the current fiscal, up from 1.4 per cent in 2023–24. ‘Real GDP has been estimated to grow by 6.4 per cent in FY 2024–25 as compared to the growth rate of 8.2 per cent in the provisional estimate (PE) of GDP for FY 2023–24,’ the NSO said.
Nominal GDP is likely to grow at 9.7 per cent in 2024–25, against 9.6 per cent in 2023–24. According to the data, nominal GDP (the GDP at current prices) is estimated to attain a level of Rs 324.11 lakh crore in 2024–25, compared to Rs295.36 lakh crore in 2023–24.
The urban economy is grappling with the dual challenge of high inflation and slowing credit growth. The Reserve Bank of India’s recent data indicates consumer confidence has moderated in urban areas, while growth in retail credit, which has a larger footprint in the urban economy, has slowed.
Further, per the NSO, the nominal gross value added (GVA) is estimated to attain a level of Rs 292.64 lakh crore in 2024–25, against Rs 267.62 lakh crore in 2023–24, showing a growth rate of 9.3 per cent. Private final consumption expenditure (PFCE) at constant prices has witnessed a growth rate of 7.3 per cent during 2024–25, over the growth rate of 4 per cent in the previous financial year.
The government’s final consumption expenditure (GFCE) at constant prices has rebounded to a growth rate of 4.1 per cent, compared to the growth rate of 2.5 per cent in the previous fiscal. The NSO also said the per capita income (at current prices) is estimated to have increased by 8.7 per cent to Rs 2,00,162 per annum. It was Rs 1,84,205 in the preceding fiscal.
Income support for India’s poor, higher MGNREGA wages and increased minimum support prices (MSPs) were the need of the hour and demanded a drastic simplification of the “comically complex” GST regime as well as Income Tax relief for the middle class.
The advance estimates released by the Union government for GDP growth in the 2024–25 financial year projected a mere 6.4 per cent growth.
This is a four-year low, and a sharp deceleration compared to the 8.2 per cent growth recorded in FY24 (2023–24). It is even lower than the recent RBI estimate of 6.6 per cent growth, which itself marked a reduction from the earlier projection of 7.2 per cent. In a few short weeks, the bottom has fallen out of the Indian economy, with the all-important manufacturing sector simply refusing to expand as it should. (IPA Service)