India's economic growth cools to 6.5% in FY25, but outperforms China, US

India’s economic growth has decelerated to 6.5 per cent in the financial year 2024–25, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday. 

The reported full-year growth rate is in line with the Reserve Bank of India's (RBI) projection, which had estimated GDP expansion at 6.5 per cent for FY25. The RBI has also maintained a 6.5 per cent growth forecast for the upcoming financial year. 

The Ministry said that gross domestic product growth for the fourth quarter stood at 7.4 per cent, down from the 8.4 per cent recorded in the same period last year. However, this figure is better than the 6.4 per cent reported in the third quarter and the 5.6 per cent recorded in the July-September period.

Though the growth rate of Asia's third-largest economy has slowed year-over-year, it is well above the recorded figures of other major economies, including China, which reported a 5.4 per cent GDP growth in the January-March period. 

Meanwhile, the United States GDP contracted at a rate of 0.3 per cent in the first quarter. The Canadian economy grew by 2.2 per cent in the quarter, while Japan's growth was restricted at 0.20 per cent . 

India’s GDP growth was primarily supported by easing inflationary pressures, with the rate now well within the Reserve Bank of India’s (RBI) target range. In April, the country’s retail inflation stood at 3.16 per cent, marking the lowest level since July 2019. 

The moderation in prices has helped sustain consumer demand and create a more stable macroeconomic environment, supporting growth figures. 

The Ministry said that India’s Real GDP, measured at constant prices, is estimated at ₹187.97 lakh crore for the FY25, up from the First Revised Estimates (FRE) of ₹176.51 lakh crore in the previous year. Meanwhile, Nominal GDP for FY25 stood at ₹330.68 lakh crore, compared to ₹301.23 lakh crore in FY24.

Agriculture leads growth, Manufacturing fall behind

On an annual basis, the output in the agriculture sector increased to 4.6 per cent in 2024-25 compared to 2.7 per cent in the previous year. The sector also saw a growth of 5.4 per cent in the fourth quarter from 0.9 per cent in Q4 last year. 

Meanwhile, the growth in the key manufacturing sector decelerated to 4.5 per cent from 12.3 per cent in 2023-24. In the fourth quarter, the manufacturing sector output slowed to 4.8 per cent from 11.3 per cent in the same period last year. 

The electricity, gas, water supply, and other utility services segment grew 5.4 per cent during the fourth quarter down from 8.8 per cent in the year-ago period.