India’s economy showed strong momentum in the last quarter of the financial year 2024-25, growing at 7.4%, the highest in four quarters, according to the latest data released on May 30. Despite this encouraging quarter, the full-year GDP growth settled at 6.5%, marking a four-year low but still positioning India as the world’s fastest-growing major economy. This growth reflects a resilient recovery supported by robust rural demand and steady progress across key sectors.
The Q4 GDP growth of 7.4% beat market expectations, with the economy expanding from Rs 47.82 lakh crore in the same quarter last year to Rs 51.35 lakh crore. Nominal GDP, adjusted for inflation, grew even faster at 10.8% for the quarter and the fiscal year. Analysts attribute the second-half growth acceleration to increased rural consumption, backed by strong agricultural output and government spending.
The agriculture sector grew 5% in Q4, a significant jump from 0.9% a year ago, while construction recorded an impressive 10.8% growth rate. However, manufacturing slowed down to 4.8% from 11.3% in the previous year’s same quarter. Similarly, trade, hotels, transport, and communication sectors saw growth slow to 6%, slightly below last year’s 6.2%.
For the full financial year, real GDP reached Rs 187.97 lakh crore, growing at 6.5% compared to the revised 9.2% growth in FY24. The nominal GDP increased by 9.8%. The agriculture sector’s full-year growth was 4.6%, up from 2.7% last year, but manufacturing slowed sharply to 4.5% from 12.3%. Service-related sectors, including trade and transport, also moderated to 6.1% growth, compared to 7.5% in FY24.
Economists see mixed signals for FY26. While global uncertainties remain, domestic factors like personal income tax relief, lower food inflation, and strong government capital expenditure suggest resilience. ICRA’s chief economist, Aditi Nayar, forecasts a slight dip in GDP growth to around 6.2% for FY26, reflecting cautious optimism amid evolving global trade conditions.
