India’s Q4 GDP Grows 7.4%, FY25 Growth Slows to 6.5%
India’s economy posted a strong performance in the fourth quarter of FY25 with GDP growth accelerating to 7.4%, marking a four-quarter high and outpacing market expectations of 6.9%. The boost came on the back of robust government capital spending and solid momentum in the construction and manufacturing sectors. Construction activity grew by a substantial 10.8%, while manufacturing recorded a three-quarter high of 4.8%, contributing significantly to overall economic output. Economists noted this as a sign of a maturing post-pandemic recovery, driven by infrastructure development and a manufacturing uptick.
FY25 Annual Growth Slows to 6.5%
Despite a strong Q4, India’s full-year GDP growth for FY25 settled at 6.5%, the slowest pace in four years and a notable drop from 9.2% in FY24. This deceleration is attributed to multiple headwinds including muted rural consumption, global economic slowdown, and lower export demand. Yet, India still outperformed most major global economies in a tough macroeconomic environment. Chief Economic Advisor V Anantha Nageswaran stated, “At 6.5%, India’s economy outshines others still recovering from Covid,” pointing to India’s relative resilience in a “growth-scarce” global scenario.
FY26 Outlook: Growth Between 6.3–6.6%
The outlook for FY26 remains cautiously optimistic. Most analysts forecast GDP growth between 6.3% and 6.6%, supported by moderating inflation, easing interest rates, and continued public capital expenditure. However, there are concerns about the sustainability of the current investment-led recovery, especially with subdued private sector participation. Economists have also flagged the persistent mismatch between profit growth, capital formation, and job creation as a structural challenge. For India to maintain a growth rate above 6.5%, experts argue that bridging these gaps will be critical to ensure more inclusive and broad-based economic momentum.
