India’s economy expanded by 6.5% in the fiscal year 2024-25 (FY25), marking its slowest annual growth since the pandemic era. This is a significant drop from the 9.2% growth recorded in FY24.
However, the January-March quarter (Q4) brought a silver lining, with GDP growth accelerating to 7.4%, surpassing analyst expectations. This uptick was driven by robust performances in the construction and manufacturing sectors, along with increased tax revenues. Despite this quarterly boost, it wasn’t enough to offset the broader annual slowdown.
Economists attribute the annual deceleration to subdued private investment and global trade uncertainties. Yet, India’s economy remains resilient, retaining its status as the world’s fastest-growing major economy. The International Monetary Fund projects that India’s economy will surpass Japan’s, reaching $4.2 trillion by the end of the year.
Looking ahead, policymakers are optimistic. The Reserve Bank of India is expected to continue monetary easing, and a favorable monsoon season is anticipated to stabilize food prices. These factors, combined with ongoing government spending, are expected to support growth in the coming fiscal year.
