India GDP data Q4 FY25 Highlights: GDP growth accelerates to 7.4% in Q4, full year growth at 6.5%; Indian economy retains 'fastest growing' tag

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group tells TOI, “India’s GDP grew by 7.4% in the quarter ended March 2025, surpassing expectations and bringing the full-year growth for FY25 to a robust 6.5%. This impressive performance comes despite heightened geopolitical tensions and global trade uncertainties. With this momentum, India retains its position as the world’s fastest-growing major economy and remains firmly on track to become the fourth-largest economy by the end of FY26.”

"Growth in the March quarter was driven by a strong performance in the services sector, which expanded by 7.3%, and a notable recovery in industry, with the construction segment recording an impressive 10.8% growth. The agriculture sector also sustained its positive trajectory, posting a growth rate of 5.4%. Furthermore, growth for the third quarter was revised upward to 6.4%, reflecting the resilience of the Indian economy.”

“On the expenditure side, Gross Fixed Capital Formation registered a healthy recovery with 9.4% growth, while net exports turned positive, buoyed by strong service exports. Looking ahead, we expect India’s growth to remain resilient and robust at 6.5% in FY26.”

“India’s GDP growth for the fourth quarter of FY25 came in at 7.4%, significantly exceeding expectations and signalling strong economic momentum. This brings full year FY25 growth to 6.5%, which is in line with the second advance estimate of MOSPI. The Q4 GVA growth stood at 6.8%, driven by a significant uptick in sectors such as manufacturing, construction, and financial, real estate, and professional services. Agricultural growth remained healthy despite moderation. Contrary to expectations, growth in the trade, hotels, transport, communication, and broadcasting services segment slowed, despite large-scale festivities such as the Kumbh Mela. On the expenditure side, private consumption remained healthy. Rural demand is expected to be supported by favourable agricultural output and easing inflation, while the outlook for urban demand remains mixed. Anecdotal evidence points to subdued wage growth, contributing to muted urban consumption. The recovery in manufacturing and construction was largely in line with expectations. It was likely supported by strategic inventory front-loading by firms in anticipation of reciprocal tariff measures and by strong government capital expenditure. Although central government capex contracted by 4% during January–February 2025, robust capex spending in Q3 helped sustain construction activity and GFCF in Q4, consistent with the typical lag between capex deployment and its economic impact.

The unevenness witnessed in the consumption recovery remains a critical monitorable going forward. The strength in rural demand is expected to continue on the back of favourable prospects for monsoon, healthy reservoir levels and upbeat agricultural output. However, the softness in urban demand continues to be an area of concern. On a positive note, inflationary pressures have been on a continued downward trajectory, particularly in the food category. Additionally, the consumption scenario is anticipated to gain on account of factors such as lower tax burden and RBI rate cuts. Though the US has put the reciprocal tariffs on a 90-day hold, we expect global economic uncertainty to persist going forward. This is likely to weigh on the private investment impulses. Given this context, a broad-based and durable consumption recovery along with the revival in government’s capex become increasingly critical for a revival in the private capex cycle. Factoring all of these aspects, we expect GDP growth to be at 6.2% in FY26,” says Rajani Sinha, Chief Economist, CareEdge Ratings.

China has registered an economic growth of 5.4 per cent in the first three months of 2025 (January-March 2025).

The growth in the January-March period was lower than the 8.4 per cent expansion in the year-ago quarter.

The real GVA is projected to reach ₹171.87 lakh crore in FY 2024-25, showing a 6.4% increase from the First Revised Estimate of ₹161.51 lakh crore for FY 2023-24.

The nominal GVA is expected to grow by 9.5%, reaching ₹300.22 lakh crore in FY 2024-25, compared to ₹274.13 lakh crore in FY 2023-24.

The Real GDP or GDP at Constant Prices is projected to reach ₹187.97 lakh crore in FY 2024-25, compared to the First Revised Estimates (FRE) of ₹176.51 lakh crore for FY 2023-24, indicating a growth of 6.5%.

The Nominal GDP or GDP at Current Prices is expected to reach ₹330.68 lakh crore in FY 2024-25, in contrast to ₹301.23 lakh crore in FY 2023-24, demonstrating a growth rate of 9.8%.

* Primary Sector has seen 4.4% growth rate as compared to growth rate of 2.7% observed in previous financial year. During Q4, FY 2024-25, this sector has observed 5.0% growth rate as compared to 0.8% growth rate in Q4 of previous financial year.
* Private Final Consumption Expenditure (PFCE) has reported 7.2% growth rate during FY 2024-25 as compared to 5.6% growth rate in the previous financial year.

* ‘Public Administration, Defence & Other Services’ sector and 7.2% growth rate in ‘Financial, Real Estate & Professional Services’ sector.
* During Q4 of FY 2024-25, ‘Construction’ sector has witnessed 10.8% growth rate, followed by 8.7% growth rate in ‘Public Administration, Defence & Other Services’ sector and 7.8% growth rate in ‘Financial, Real Estate & Professional Services’ sector.

While India's GDP growth accelerated to 7.4% in the last quarter of 2024-25, the overall fiscal year number of 6.5% was a 4-year low.

* Real GDP has been estimated to grow by 6.5% in FY 2024-25. Nominal GDP has witnessed a growth rate of 9.8% in FY 2024-25.
* In Q4 of FY 2024-25, Real GDP and Nominal GDP has been estimated to grow by 7.4% and 10.8% respectively.

India's manufacturing sector needs to achieve an annual growth of 15 per cent to reach a contribution of 25 per cent to India's GDP (equivalent to USD 7.5 trillion) through Viksit Bharat 2047, according to NITI Aayog CEO BVR Subrahmanyam's statement on Friday. At a Confederation of Indian Industry (CII) gathering, he noted that manufacturing presently contributes approximately 17 per cent to India's GDP.

"Manufacturing sector should be growing at 15 per cent atleast," he suggested. "That's the only way to rise from its current share of 17 per cent to 25 per cent."
When India attains developed nation status by 2047, its GDP is expected to reach USD 30 trillion, with the manufacturing sector anticipated to contribute 25 per cent (USD 7.5 trillion).

The NITI Aayog chief executive indicated that achieving the USD 30 trillion GDP target would necessitate maintaining a growth rate of approximately 7.5 per cent.

India will continue to be the world's fastest-growing major economy for the next three decades, according to Union Minister for Commerce and Industry Piyush Goyal.

Speaking at the CII Annual Business Summit 2025 in Delhi on Thursday, the commerce minister presented an overview of India's economic achievements.

India has sustained a consistent growth rate between 6-7 per cent, with aspirations to elevate it to 8 per cent at constant prices, Goyal stated. He emphasised that India continues to be amongst the top-performing emerging markets, despite global economic challenges.

"Today, India holds the fourth-largest foreign exchange reserves in the world at about 690 billion dollars. Our inflation has remained below 4 per cent for the last three months. The Reserve Bank has done a commendable job balancing liquidity and currency management," Goyal said.

The Minister highlighted India's attractiveness for investments, pointing out that Indian firms have generated approximately 20 per cent CAGR returns in the past 20-25 years.

Crisil forecasts gross domestic product (GDP) growth at 6.5% in fiscal 2026, with external headwinds posing downside risks. Nevertheless, improving domestic consumption is likely to support industrial activity. It expects domestic consumption demand to improve driven by (1) healthy agricultural growth given the forecast of above normal monsoon (2) easing inflation supporting discretionary spend (3) rate cuts by the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) and (4) income tax relief this fiscal.

“High-frequency indicators for April and May 2025 suggest the need for sustained policy support to maintain the growth momentum. The manufacturing PMI increased to a 10-month high of 58.2 in April 2025, while services PMI increased to 58.7, well above its long-run average of 54.2. Gross GST collections stood at INR2.37 lakh crore in April 2025, the highest-ever monthly collections since the inception of GST. Growth in gross bank credit remained nearly stable at 12.1% in March 2025, close to its level of 12.0% in February 2025. Growth in merchandise exports and imports increased to 9.0% and 19.1%, respectively, in April 2025 from 0.7% and 11.4%, respectively, in March 2025, aided partly by base effects. WPI inflation fell to a 13-month low of 0.9% in April 2025 on account of lower food and fuel prices. IIP growth remained low at 3% in March 2025, although improving marginally from 2.7% in February 2025. Also, retail sales of motor vehicles posted a low growth of close to 3% in April 2025. This was, however, an improvement over the contraction of (-)0.7% in March 2025,” says EY in its May 2025 Economy Watch issue.

“Headline inflation moderated during January-February 2025 following a sharp correction in food inflation. The outlook for food inflation has turned decisively positive. The uncertainties regarding rabi crops have abated considerably and the second advance estimates point to a record wheat production and higher production of key pulses over that last year. Along with robust kharif arrivals, this is expected to set the stage for a durable softening of food inflation. Sharp decline in inflation expectations in our latest survey for three months and one year ahead would also help anchor inflation expectations, going ahead. Furthermore, the fall in crude oil prices augurs well for the inflation outlook. Concerns on lingering global market uncertainties and recurrence of adverse weather-related supply disruptions, however, pose upside risks to the inflation trajectory.

Taking all these factors into consideration, and assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent. The risks are evenly balanced,” said RBI in its policy review in April.

According to EY, with CPI inflation likely to be contained at 4% or below, on average, in FY26, India should be able to achieve a real GDP growth of 6.5% with a continued rate reduction cycle in FY26 along with GoI’s restoration of strong emphasis on capital expenditure.

“Real GDP growth for 2025-26 is now projected at 6.5 per cent, with Q1 at 6.5 per cent; Q2 at 6.7 per cent; Q3 at 6.6 per cent; and Q4 at 6.3 per cent. While the risks are evenly balanced around these baseline projections, uncertainties remain high in the wake of the recent spike in global volatility. It may be noted that the growth projection for the current year has been marked down by 20 basis points relative to our earlier assessment of 6.7 per cent in the February policy. This downward revision essentially reflects the impact of global trade and policy uncertainties,” RBI governor Sanjay Malhotra had said in the monetary policy review in April.

“India may need to rely on both its monetary and fiscal policy levers to mitigate the adverse impact of domestic developments and global slowdown on its GDP growth. There was a sudden slowdown in the growth of GoI’s capital expenditure in FY25. During April-February 2025, it showed a growth of only 0.8%. In recent years, GoI’s capital expenditure growth averaged 30.9% during FY22 to FY24. It thus served as a key fiscal driver to support overall growth. At this juncture, GoI’s capital expenditure growth momentum needs to be restored and supplemented by a continuation of the repo rate reduction cycle so that monetary and fiscal policy support can ensure that India’s real GDP growth does not slip below 6.5% in FY26,” says DK Srivastava, Chief Policy Advisor, EY India.

The Reserve Bank of India is widely expected to cut repo rates at least two more times this year as the Consumer Price Index (CPI) inflation eases. RBI governor Sanjay Malhotra has said that the central bank will focus on supporting economic growth amidst global economic uncertainty.

“Real GDP is estimated to grow at 6.5 per cent in 2024-25 on top of a 9.2 per cent growth rate observed in the previous year. In 2025-26, prospects of agriculture sector remain bright on the back of healthy reservoir levels and robust crop production.Manufacturing activity is showing signs of revival with business expectations remaining robust, while services sector activity continues to be resilient,” RBI governor Sanjay Malhotra said in April.

JP Morgan anticipates India's GDP growth to reach 7.5% year-on-year for the March quarter, whilst projecting a Gross Value Added (GVA) growth of 6.7%, showing an increase from 6.2% observed in the preceding quarter.

“We are forecasting Jan-March'25 real GDP to have bounced back to 6.8% yoy, after falling to as low as 5.6% yoy during the July-Sep'24 quarter and then recovering modestly to 6.2% yoy in Oct-Dec'24. We are forecasting real GVA growth to be at 6.5% yoy, lower than our GDP growth estimate. A word of caution about the GDP forecasts. As the previous quarters' data may get revised, and sometimes these revisions can be substantial, there is a possibility of the Jan-March'25 GDP growth surprising relative to consensus estimates. Bloomberg consensus estimate for Jan-March'25 real GVA is 6.4%yoy and 6.8% yoy for real GDP, similar to our estimate,” says Kaushik Das, Chief Economist - India, Malaysia, and South Asia at Deutsche Bank AG.

“India's economic trajectory remains resilient despite global headwinds and regional geopolitical tensions, including persistent border concerns with Pakistan. The projected real GDP growth of 6.4% in FY25 and 6.5% in FY26 reflects the economy's underlying strength and resilience, driven by robust domestic demand, sustained government capex, and gradual recovery in private investments.

While external uncertainties—such as supply chain disruptions and energy market volatility—pose challenges, India continues to benefit from strong service sector performance, a stable banking system, and improving manufacturing output under schemes like PLI.

On the inflation front, CPI is expected to moderate from 4.9% in FY25 to 4.3% in FY26, aided by easing food prices, prudent monetary policy, and a normal monsoon forecast. However, inflationary risks persist because of global commodity prices and any escalation in geopolitical tensions.

Overall, the economy is poised to maintain stable and sustainable growth, provided structural reforms, fiscal discipline, and geopolitical risk management continue to remain policy priorities. India will continue to be the fastest-growing major economy in the world and consolidate its economic size and heft in the comity of nations,” says Manoranjan Sharma, Chief Economist at Infomerics Valuations and Rating.