India GDP FY25: Economy grows 7.4% in Q4; FY25 growth falls to a four-year low of 6.5%

India’s Gross Domestic Product (GDP) grew 6.5% in the fiscal year 2024-25 (FY25), increasing from 8.4% recorded in 2023-24 (FY24), according to the official data released on Friday, May 30. 

The country’s economy grew 7.4% against the estimate of 6.8% in the fourth (January-March) quarter of FY25, National Statistical Office data said on Friday. In the first quarter of FY25 (April-June), the economy recorded a growth of 6.7%, while it grew by 5.6% and 6.2% in the second (July-September) and third (October-December) quarters, respectively. 

"India's Q4 FY2025 YoY GDP growth rose to an enviable 7.4%, higher than our above-consensus forecast of 6.9%, and exceeded the real GVA growth of 6.8%, boosted by net indirect taxes. With an upward revision in the pace of Q3 GDP expansion, led by agriculture, the full year GDP growth printed in line with the second advance estimate of 6.5%," said Aditi Nayar, Chief Economist Head of Research & Outreach at ICRA, commenting on the GDP growth.

In the March quarter, the nominal GDP has been estimated to grow by 10.8%.

In the second advance estimate for the fiscal year 2024-25, the NSO had estimated the Indian economy to grow by 6.5%. Similarly, as per the first advance estimate for FY25, the economy was expected to grow by 6.4%.

The Reserve Bank of India (RBI) had also projected India's GDP to grow at 6.5% during the fiscal year 2024-25.

In the previous years, India's GDP grew by 8.7%, 7.2% and 9.2% in FY22, FY23 and FY24, respectively.

The Finance Ministry in March said that it anticipates the Indian economy to grow by 6.5% in FY25 despite considerable external headwinds.

In FY25, Private Final Consumption Expenditure (PFCE) grew 7.2% against the 5.6% growth rate recorded in the previous fiscal year.

Sectoral growth in Q4 and FY25

The construction sector in India is estimated to record a growth rate of 9.4% in FY25, followed by the Public Administration, Defence & Other Services sector, which has been estimated to grow by 8.9%. Further, the Financial, Real Estate & Professional Services sector is estimated to grow by 7.2% in 2024-25.

During the quarter ended March 31, 2025, the Construction sector grew 10.8%, followed by the Public Administration, Defence & Other Services sector with a growth rate of 8.7% and the Financial, Real Estate & Professional Services sector with a 7.8% growth rate.

"In Q4 FY2025, manufacturing, construction, financial real estate and professional services, and public administration, defense, etc logged a healthier pace of growth relative to our projection. In terms of the expenditure aggregates, the sequential uptick in GDP growth in Q4 FY2025 was led by gross fixed capital formation and lower drag from net exports, with services exports having accelerated appreciably in that quarter. However, private consumption growth eased, and likely remained uneven, while government final consumption expenditure contracted in Q4 FY2025, after a gap of two quarters," Nayar added.