(MENAFN- KNN India) New Delhi, Jun 28 (KNN) India's private consumption has reached its highest share in the country's GDP in two decades, underscoring strong domestic demand as a key pillar of economic growth, according to the latest monthly economic report released by the Ministry of Finance.

The report revealed that private consumption's share in nominal GDP rose from 60.2 percent in FY24 to 61.4 percent in FY25-the second-highest level recorded in the past 20 years.

On the demand side, economic growth was underpinned by three major contributors: robust private consumption, stable investment activity, and an improvement in net exports.

Private Final Consumption Expenditure (PFCE) grew by 7.2 percent in FY25, accelerating from 5.6 percent in the previous fiscal. The uptick, the Ministry noted, was largely driven by a rebound in rural consumption.

Gross Fixed Capital Formation (GFCF), an indicator of investment activity, increased by 7.1 percent in FY25.

While this is marginally lower than the 8.8 percent growth seen in FY24, it remains above pre-pandemic levels. GFCF accounted for 29.9 percent of nominal GDP, slightly down from recent years but higher than the FY16–FY20 average of 28.6 percent.

India's external sector also showed resilience amid global uncertainties. Exports, measured at constant 2011–12 prices, grew by 6.3 percent in FY25-significantly stronger than the 2.2 percent growth in FY24.

Meanwhile, imports contracted by 3.7 percent, reversing the previous year's sharp increase of 13.8 percent. This decline in imports contributed positively to net exports and overall GDP growth.

The Finance Ministry's report emphasised the balanced nature of India's growth, with private consumption, investment, and trade all contributing meaningfully.

The findings signal continued economic resilience and underscore the importance of demand-driven momentum as India navigates a complex global environment.

(KNN Bureau)

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