India’s economy rode over global headwinds in the last quarter of FY 2024–25 to post a strong 7.4% GDP growth in January–March 2025. For the fourth consecutive year, this surpassed the 6.7% professional projection and cemented India’s position for the world’s largest economy with the strongest pace of expansion.
Q4 FY25: Strong Conclusion During Global Headwinds
The 7.4% growth in Q4 was the strongest quarterly expansion since early 2024, when it was powered by important contributions from the construction industry, which increased by 10.8%, and manufacturing, which increased by 4.8%. The broad character of the economic expansion can be seen by the 5.4% growth in the agricultural sector and the 7.3% rise in the services sector.
Strong domestic demand and rising private consumption were cited by Chief Economic Adviser V. Anantha Nageswaran was one of the main forces behind the FY26 growth.
Full-Year FY25: Growth Moderates to 6.5%
The FY 2024–25 GDP growth concluded at 6.5%, the smallest every year rise in four years, despite the strong Q4 performance. This weakening is a reflection of the fiscal year’s earlier challenges, which included slowing domestic demand and uncertainties surrounding international trade.
Although acknowledging the slowdown, Finance Minister Nirmala Sitharaman said that India’s large economy has continued to develop at a rapid pace for the fourth year in a row.
Sectoral Insights: Construction and Services Lead
With a 10.8% gain in Q4, the construction sector was the best-performing sector, fueled by plans for growth in cities and increased infrastructure spending. Professional, financial, and real services all did nicely in the services sector, growing by 7.8%.
Manufacturing continued to increase at a powerful frequency of 4.8%, and the agriculture sector reported a constant 5.4% pace, underpinned by good monsoons and better rural demand.
Investment and Consumption Trends
Gross Fixed Capital Formation (GFCF), an important indicator of investment, increased by 9.4% in Q4, reflecting a rebound in capital spending. Private Final Consumption Expenditure (PFCE) further picked up, increasing by 7.2% in FY25, led by rising rural expenditure and revival in consumer confidence.
Global Context and Future Outlook
In the face of global uncertainties, India’s economic progress is evident, like geopolitical tensions and trade disruptions. The International Monetary Fund (IMF) estimates that the Indian economy could equal Japan’s at $4.2 trillion, highlighting its increasing international importance.
In the future, economists forecast growth of 6.3% to 6.6% for FY 2025–26 with hopes of ongoing financial easing and accommodative fiscal policies to maintain the growth pace.