The Indian economy expanded by 6.5% in FY25, thanks to fourth-quarter growth surging by 7.4% during January-March and a slight upward revision in the third-quarter growth to 6.4% from 6.2% for the October-December period.And even though the 6.5% number is a 4-year low compared to 9.7% clocked in FY22, 7.6% in FY23 and 9.2% in FY24, India has maintained its position as the fastest-growing economy.
According to the Chief Economic Advisor Anantha Nageswaran, “ The 6.5% growth number, given that many of the economies have slowed post-COVID after their initial recoveries, means India still outshines many of the larger and key economies.”
As per the FY25 GDP print, the share of private consumption to GDP has risen to 61%, its highest since 2004, while gross fixed capital formation holds a steady 30% share in the economy and exports at slightly over 21%. Monetary policy has boosted liquidity and credit conditions, while the services sector has maintained its growth.“India’s performance in a growth-scarce environment, post-COVID and despite the rising uncertainties due to geopolitical and trade tensions, which predate 2025, I think India is holding up its growth numbers better than many of the advanced economies,” Nageswaran said.The CEA also said India faces smaller forecast cuts amidst slower global growth in 2025 and 2026. “…we can probably achieve a growth rate that is at the higher end of the range; if not, we will be closer to the lower end of the range of 6.3%–6.8%,” he said.However, the CEA caveated the forecast of higher growth by observing that India will need to bring in more FDI and the private sector will need to do more capital investment to boost urban consumption, hiring, and employee compensation.ALSO READ | India’s fiscal deficit at 4.8% of GDP in FY25(Edited by : Ajay Vaishnav)
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