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India’s economy may have slowed to a four-year low of 6.5% growth in FY25, but the final quarter of the fiscal delivered a pleasant surprise. The GDP for Q4 FY25 surged 7.4%, beating expectations and signaling resilience despite global headwinds.
While the slowdown in full-year growth compared to FY24’s 9.2% appears sharp, policymakers remain confident that India will retain its crown as the fastest-growing major economy in the world.
• Full-Year GDP Growth: 6.5%
• Q4 GDP Growth: 7.4% (Highest in the year)
• GVA Growth (FY25): 6.4%
• Private Consumption (YoY): Up 7.2%
• Agricultural Growth: 4.6% (FY25), 5.4% (Q4)
• Construction Growth: 9.4% (FY25), 10.8% (Q4)
• Manufacturing Growth: 4.5% (FY25), 4.8% (Q4)
• Retail Inflation (April): 3.16% — near 6-year low
The Indian economy grew at a healthy clip through most of FY25, but several external shocks dragged down full-year momentum:
Despite these pressures, robust rural demand, higher government spending, and a resilient services sector helped keep the economy afloat.
The final quarter (January–March 2025) showed strong signs of revival:
• Industrial activity picked up, supported by increased infrastructure and construction output. • Agricultural output grew 5.4% YoY, indicating improved rural productivity. • Consumer spending bounced back, particularly during the festive season. • The construction sector grew by 10.8%, a significant jump from Q4 FY24.
JP Morgan had projected Q4 GDP growth at 7.5%, with GVA growth at 6.7% — estimates that were closely aligned with the actual print.
Amid easing food prices and a favorable monsoon forecast, retail inflation dropped to 3.16% in April, its lowest since 2019.
This gave the Reserve Bank of India (RBI) room to maneuver. In February 2025, the central bank cut the repo rate by 25 basis points — its first cut in five years. Analysts expect another rate cut in June, especially if inflation stays low.
Looking forward, the RBI projects 6.5% GDP growth for FY26, with CPI inflation expected to ease from 4.9% to 4.3%.
Even with the slowdown, India’s macroeconomic fundamentals remain solid:
• The IMF expects India to surpass Japan in economic size by year-end, touching $4.18 trillion. • A stable banking system, growing digital economy, and government schemes like PLI (Production Linked Incentives) continue to bolster manufacturing. • India’s limited reliance on global goods trade helps cushion external shocks better than many peers.
“India continues to benefit from strong service sector performance, controlled inflation, and improving manufacturing output,”
— Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuations and Ratings
• 📉 FY25 growth dipped to 6.5%, lowest since the pandemic period
• 🚀 Q4 GDP surprised at 7.4%, showing renewed momentum
• 🌾 Rural demand and agriculture played key roles in Q4 rebound
• 🏗️ Construction and services led the quarterly surge
• 🏦 RBI’s rate cut cycle has begun, with another cut likely if inflation stays low
• 🌎 India remains on track to become the third-largest economy, with IMF support
We don’t just report numbers — we break down what they mean for your portfolio and your future. If you’re tracking India’s growth story, monetary policy shifts, or the next big economic play, we’ve got the insight you need.
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