New Delhi : India’s economy grew by 6.5% in the financial year 2024-25 (FY25), marking its slowest pace in four years, according to data released by the National Statistics Office (NSO). According to the government’s statement, “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.” The government has also slightly lowered its earlier forecast for nominal GDP growth, which was 9.9%.
While the full-year GDP number has slowed, data for the last quarter of FY25 painted a better picture. The real GDP growth for the March quarter (Q4) stood at 7.4%, which is the fastest among all four quarters of the year. Growth in the third quarter climbed to 6.2%, up from the previously estimated 5.6%. With these latest numbers, India remains among the world’s fastest-growing economies.
The International Monetary Fund (IMF) also projects that India will overtake Japan in economic size by the end of the year, reaching $4.18 trillion. Nominal GDP growth for the same quarter came in at 10.8%. “The Q4 FY25 GDP numbers are marginally higher than our expectations but broadly track the government’s earlier estimate. The GVA estimate, however, remains more tepid at 6.8%. Expectedly, the high net indirect tax growth has led to the wide gap between the two,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.
The high frequency data in the last few months continues to point towards a patchy recovery, with the sequential momentum suggesting moderation compared to the previous quarter. We expect the benign inflation and soft growth to continue to provide the MPC room for incremental monetary easing, with 25 bp cut in the upcoming June policy,” she added. Private consumption rose by 7.2% year-on-year, up from 5.6% in the previous fiscal. This increase was supported by stronger rural demand, helped by easing food prices and increased spending during the festive season compared to the previous year.
Agriculture witnessed a growth of 4.6% in FY25, a notable rise from 2.7% in the previous year. During the fourth quarter, the sector expanded by 5.4%, a sharp jump from just 0.9% in the same quarter a year earlier.The construction industry recorded a year-on-year growth of 9.4%, slightly below the 10.4% growth in the preceding year. However, in the March 2025 quarter, the sector expanded by 10.8%, up from 8.7% in Q4 FY24. Manufacturing saw a slowdown, growing by 4.5% in FY25 compared to 12.3% in the previous fiscal.