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India’s GDP expands 6.5% in FY25 as Q4 growth accelerates to 7.4%

Strong domestic demand pushed output to $3.9 trillion, with growth projected at 6.3–6.8% for FY26

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The biggest X factor for the economy, however, remains unchanged as far as the past few years are concerned. Will private capex finally gain momentum and emerge as the key driver of a sustained growth revival? (AFP)
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Overview

  • India’s economy posted 7.4% growth in January–March 2025, lifting annual GDP growth to 6.5% and maintaining its status as the fastest-growing major economy.
  • The economy’s size reached $3.9 trillion, positioning India on track to surpass Japan as the world’s fourth-largest economy.
  • Private consumption rose 7.2% and gross fixed capital formation grew 7.1% in FY25, while construction expanded 9.4% and agriculture recovered with 4.6% growth.
  • Fiscal consolidation narrowed the deficit to 4.8% of GDP and net indirect taxes surged over 12%, highlighting stronger public finances and lower subsidies.
  • Official forecasts for FY26 growth range from 6.3% to 6.8%, though agencies warn that global uncertainties, US trade policy and subdued private investment could dampen momentum.