India's GDP growth slows to 6.5% in FY25, January-March quarter growth at 7.4%—below FY24 levels

India's economic growth slowed to 7.4 per cent in the March quarter of fiscal 2024-25, bringing down the annual growth rate to 6.5 per cent during 2024-25, according to official data released on Friday.

The annual figure, which was slightly above market expectations of 6.3 percent, was helped by a stronger January-March quarter that topped projections.

"Real GDP has been estimated to grow by 6.5 per cent in FY 2024-25," the National Statistics office said in a statement.

The growth in the January-March period was lower than the 8.4 per cent expansion in the year-ago quarter.

According to the data released by the National Statistics Office (NSO), the economy expanded 6.5 per cent in 2024-25 against a 9.2 per cent growth in 2023-24.

The NSO, in its second advance estimate of national accounts, had pegged the country's growth at 6.5 per cent for 2024-25.

The gross value added (GVA), seen as a more accurate measure of underlying economic activity, grew 6.8% in the first three months of 2025, compared to a revised expansion of 6.5% in the previous quarter. GVA strips out indirect taxes and government subsidy payouts, which tend to be volatile.

According to NSO's second advance estimates, the country's economy was projected to grow at 6.5 per cent in 2024-25.

The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25.In 2023-24, India's GDP grew by an impressive 9.2 per cent, continuing to be the fastest-growing major economy.

According to official data, the economy grew 8.7 per cent and 7.2 percent, respectively, in 2021-22 and 2022-23.

The Ministry of Finance, in a report in March 2025, anticipated that Indian economy would achieve a growth rate of 6.5 per cent in 2024-25, despite considerable external headwinds.

The Finance Ministry monthly report added that the performance of the economy in the past quarters was driven by strong agricultural and service sector performance on the supply side and a steady increase in consumption and core merchandise and services exports on the demand side.

‘Construction’ sector is estimated to record a growth rate of 9.4% in FY 2024-25, followed by 8.9% growth rate in ‘Public Administration, Defence & Other Services’ sector and 7.2% growth rate in ‘Financial, Real Estate & Professional Services’ sector.

During Q4 of FY 2024-25, ‘Construction’ sector has witnessed 10.8% growth rate, followed by 8.7% growth rate in ‘Public Administration, Defence & Other Services’ sector and 7.8% growth rate in ‘Financial, Real Estate & Professional Services’ sector.

Private Final Consumption Expenditure (PFCE) has reported 7.2% growth rate during FY 2024-25 as compared to 5.6% growth rate in the previous financial year.

The government has retained its full-year FY25 real GDP growth estimate at 6.5%, in line with its earlier forecast, even as economists predicted a slightly lower figure of around 6.3%.

Private consumer spending, which accounts for 57% of Indian GDP, rose 6% year-on-year in January-March, down from a revised 8.1% in the previous quarter, as rural demand for durables and farm equipment like tractors improved, while urban spending remained subdued.

Retail inflation, which eased to a near six-year low of 3.16% in April, alongside a favourable monsoon forecast, is expected to keep food prices in check and pave the way for the Reserve Bank of India to cut its policy repo rate again next month.

Government spending fell 1.8% in the three months through March compared to a revised expansion of 9.3% in the previous quarter, the data showed.

Capital spending rose 9.4% in the quarter though some private firms delayed investment amid global uncertainties such as U.S. President Donald Trump's trade tariffs.