India’s economic growth slowed to 7.4 percent in the March quarter of fiscal 2024–25, bringing down the full-year GDP expansion to 6.5 percent, according to data released by the National Statistics Office (NSO) on Friday.
While the annual figure came in slightly above market expectations of 6.3 percent, it marked a slowdown from the 9.2 percent growth recorded in 2023–24. The NSO’s second advance estimates had earlier projected 6.5 percent growth for the year, a view echoed by the Reserve Bank of India and the Ministry of Finance.
The economy’s performance in the January–March quarter was stronger than anticipated, but still lower than the 8.4 percent growth seen during the same period a year earlier.
The gross value added (GVA), considered a more accurate gauge of core economic activity as it excludes the impact of taxes and subsidies, rose by 6.8 percent in the March quarter, compared to a revised 6.5 percent growth in the preceding quarter.
On the supply side, the construction sector led the growth with a 10.8 percent expansion in Q4, followed by an 8.7 percent rise in public administration, defence and other services, and 7.8 percent growth in financial, real estate and professional services. For the full year, these sectors recorded growth rates of 9.4 percent, 8.9 percent and 7.2 percent respectively.
On the demand side, private final consumption expenditure (PFCE) grew by 7.2 percent in 2024–25, up from 5.6 percent the previous year. However, private consumer spending--which accounts for nearly 57 percent of GDP--rose by only 6 percent in the March quarter, down from 8.1 percent in the previous quarter, as rural demand showed signs of recovery while urban consumption remained tepid.
Capital expenditure increased by 9.4 percent during the March quarter, even as some private investment decisions were delayed amid lingering global uncertainty, including trade-related concerns. In contrast, government spending declined by 1.8 percent, reversing from a 9.3 percent rise in the previous quarter.
Retail inflation dropped to a near six-year low of 3.16 percent in April. Combined with a favourable monsoon forecast, the easing inflation may support further rate cuts by the Reserve Bank of India in the coming months.
Despite global headwinds, the Ministry of Finance in its March 2025 report reaffirmed confidence in India’s resilience, citing strong performances in agriculture and services, as well as steady growth in exports and domestic consumption.
Looking ahead, the chief economic adviser, V Anantha Nageswaran, has projected growth in the range of 6.3 to 6.8 percent in FY26 and beyond, signalling continued optimism for the Indian economy against a challenging global backdrop.