Source: Business Standard
India’s economy expanded at a rate of 7.4% in the January–March 2025 quarter (Q4 FY25) according to data released by the government on Friday, compared with 8.4% a year ago for the same quarter.
For the entire financial year 2024–25 (FY25), the country’s Gross Domestic Product (GDP) grew at a rate of 6.5%, down from 9.2% in 2023–24 (FY24). The slowdown in this growth rate indicates that the speed of India’s recovery from the pandemic has slowed in the year prior.
While India’s economy continues to slow down, it remains one of the fastest-growing major economies in the world. The recent growth results come shortly after India became the news for overtaking Japan as the world’s fourth-largest economy. NITI Aayog’s CEO B.V.R. Subrahmanyam, announced recently “It is only the US, China and Germany which are larger than India, and if we stick to what is being planned and what is being thought through, in 2.5-3 years, we will be the third largest economy,”
Earlier in the year, India’s economy showed growth prospects. In the growth reports for the July-September (Q2 FY25) quarters, there was a decent growth of 5.6%; and in the October- December (Q3 FY25) periods, there was a further growth to 6.2% growth rate. A good part of these increases was primarily influenced by consumers finally coming back into the market, specifically in rural areas. However, with the latest results, growth has slowed back again in the final quarter, primarily due to lower government spending and uncertainties looming throughout global economies.
The growth of 6.5% in FY25 is marginally higher than the earlier 6.4% estimate earlier in the year. There is another important thing to note, marginally bigger revision in GDP growth in FY24 from 8.2% to 9.2%, the second-highest growth in a year in the preceding 12 years.
Experts believe the moderation in growth rate, may afford the Reserve Bank of India (RBI) an opportunity to lower interest rates in the foreseeable future. With inflation easing and a normal monsoon anticipated, the RBI may consider further action to support the economy.
Despite facing global challenges such as slowdowns in other major economies, trade uncertainty, India’s domestic demand, increasing investments and unsurpassed strength in services continue to provide growth support. In addition, the government’s focus on reforms, infrastructure development, and keeping the economy on the right path is clearly evident.
