India's services sector continues to be the primary driver of economic growth, outpacing both manufacturing and agriculture, according to the Reserve Bank of India's (RBI) Annual Report.
According to the report, released on May 29, the services sector grew by 7.5 percent in FY25, making it the fastest-growing major component of Gross Value Added (GVA).
This is despite the fact that the total GVA at basic prices rose by 6.4 percent in FY25, down from 8.6 percent in the previous year, signalling a moderation in economic momentum.
Agriculture, forestry, and fishing grew by 4.6 percent during the year, showing a recovery from the previous year's slower pace of 2.7 percent. Despite this rebound, its contribution to overall growth remained limited in comparison to services.
The industrial sector, comprising manufacturing, mining, and utilities, expanded by 4.3 percent, a notable deceleration from the 11.0 percent growth recorded in 2023-24.
Manufacturing in particular slowed sharply, growing at 4.3 percent compared to 12.3 percent in the previous year, as momentum in key industries such as petroleum, metals, and cement eased.
Corporate data further underscores the services sector's dominance.
In FY24, services companies reported a 15.5 percent increase in operating profits, outpacing the 13.2 percent growth observed in manufacturing firms. The services sector also led in profit after tax, with a surge of 38.1 percent, compared to a 7.6 percent rise in manufacturing.
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