India's FY25 economic growth hits four-year low of 6.5%, Q4 GDP beats estimates
India's economic growth in FY25 hit a four-year low of 6.5 per cent, slowing down sharply from the 9.2 per cent growth recorded in FY24. However,
Q4 GDP growth
beat estimates after accelerating to 7.4 per cent but it couldn't save the economy from posting its slowest growth since Covid-era.
Nonetheless, New Delhi's key officials have backed India's growth potential and vouched that the country will retain its title as the
fastest-growing major economy
in the world.
The full-year growth remained within official projections, as private investment remained subdued amid global uncertainties.
In the quarter ending March 31, 2025, India's growth stood was fastest in the four quarters, on the back of robust industrial activity and sustained global trade tensions grew larger by day.
The third quarter had seen growth rise to 6.2 per cent, revised upward from an earlier estimate of 5.6 per cent, showing resilience amid global headwinds.
The fourth quarter was marred by global trade disruptions led by Trump's tariffs and escalation of the Russia-Ukraine war. However, the Indian economy powered through the storm on the back of pick up rural demand and healthy government spending.
Moreover, the latest growth figures continue to keep New Delhi in the race of fastest economies in the world. The International Monetary Fund (IMF) also expects India's economic size to surpass Japan's by the end of the year, reaching $4.18 trillion.
A notable divergence between GDP and gross value added (GVA) was expected with the latter stripping out taxes and subsidies for a clearer picture of underlying economic activity. The GVA stood at 6.4 per cent.
JP Morgan, for instance, estimated March quarter GDP growth at 7.5 per cent , but GVA growth at a more modest 6.7 per cent .
Some analysts said that the higher-than-expected GDP print might be a reflection of a fall in government subsidies, which could inflate the headline number without reflecting equivalent real economic momentum.
Despite the external challenges, the Indian economy remains relatively healthy due to its limited reliance on global goods trade, recent tax cuts, controlled inflation and a potentially softer interest rate environment.
'While external uncertainties—such as supply chain disruptions and energy market volatility—pose challenges, India continues to benefit from strong service sector performance, a stable banking system, and improving manufacturing output under schemes like PLI,' said Dr. Manoranjan Sharma, Chief Economist at Infomerics Valuations and Ratings Ltd.
In February 2025, the RBI had, for the first time in five years, cut the repo rate by 25 bps, a move expected to aid India's growth blitz.
Retail inflation dropped to a near six-year low of 3.16 per cent in April, and a favourable monsoon forecast is expected to help stabilize food prices—factors that could allow the Reserve Bank of India (RBI) to consider a rate cut in June.
Looking ahead, the RBI has projected 6.5 per cent growth for the fiscal year beginning April 1, 2025.
'On the inflation front, CPI is expected to moderate from 4.9 per cent in FY25 to 4.3 per cent in FY26, aided by easing food prices, prudent monetary policy, and a normal monsoon forecast. However, inflationary risks persist because of global commodity prices and any escalation in geopolitical tensions,' said Sharma.
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Time of India
15 minutes ago
- Time of India
Fordoward Thinking
Iran may still negotiate with US, taking a long view, while skirmishing with Israel. Even if its nuclear infra is damaged, its knowhow isn't. But if the conflict spreads, welfare of 9mn Indians in the region will be New Delhi's first concern For two decades every United States administration said it might someday bomb Iran's enrichment plants. On Saturday night that 'someday' arrived. B-2 stealth bombers dropped 30,000-pound 'bunker buster' bombs while submarines and aircraft launched Tomahawks at Fordow, Natanz and Isfahan, the three most consequential nodes in Iran's IAEA monitored nuclear network. Trump declared that 'Fordow is gone', and that Tehran must 'agree to end this war'. The flourish was vintage Trump – muscular and headline grabbing. But behind the applause lines lies a strategic gamble whose downsides may echo far beyond Qom. Trump crossed a threshold earlier presidents tiptoed around, turning an Israel-Iran slugfest into a US-Iran confrontation. He insists the raid was a 'one-off', intended to cripple enrichment. Although neither US nor Israel has produced evidence that Iran was on the brink of building a bomb, the Pentagon's quick look report claims the strikes set the programme back by years at minimal cost. Physics, however, counsels humility. Centrifuges are hardware while enrichment expertise is software lodged in scientists' heads. Bombs can destroy cylinders but not knowledge. Hardliners in Tehran will now argue that only a nuclear weapon can deter the next bunker buster. Did the raid delay a bomb or make it inevitable? Iran accused US of a grave violation of the UN Charter, NPT and international law and vowed that it will not go unanswered. The easiest escalation is to menace the Strait of Hormuz through which about a fifth of global oil passes every day. Next may come missile salvos on Gulf energy infra or on US installations, and then the possible activation of proxies from Lebanon to Yemen. With Iran's parliament reportedly approving the closure of the strait, Brent could easily move past $100 a barrel. Oxford Economics projects $130 if flows are disrupted, a level that would push world inflation back toward 6%. Traders are already paying a war premium in afterhours quotes. Jerusalem meanwhile is jubilant. Netanyahu called the strike a bold decision. Strategically Israel has shifted part of the fight and the risk to Washington. If Iran retaliates, Americans rather than Israelis will calibrate the counterpunch. That is deterrence by entanglement in the short run. Over time it hands Iran a larger menu of US targets and risks dragging America into a war it does not want. Russia immediately cited the bombing as proof of US recklessness while Beijing called it a serious violation of international norms. Any condemning move at the Security Council will face a US veto. However, in the General Assembly the Global South is expected to side with Iran in significant numbers. 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Absent clarity Tehran will read 'time for peace' as code for surrender. In US, supporters have praised decisive action; critics have warned that the President had bypassed Congress and demanded a War Powers vote. Trump's boast that the mission was historic and limited is politically smart yet strategically ambiguous. If Iran swallows the blow and returns to talks the White House can claim victory. If Tehran retaliates Washington can strike again and say it had no choice. Either way the attack chips away at the nonproliferation regime and bets that humiliation will not ignite a wider war. The US entry into another West Asian conflict recalls 1991 and 2003, but this round involves nuclear facilities, peer power pushback and an energy hungry Global South. Fordow's tunnels may indeed be rubble, yet geopolitics rarely collapses neatly. US strikes may be tactically brilliant. Strategically they kick a radioactive can down a much steeper road. That road needs to be kept from becoming a cratered battlefield. The test is whether diplomacy can move faster than the bunker busters. The writer is former permanent representative of India to UN and served as an international civil servant at IAEA Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
India Gazette
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- India Gazette
India can play proactive role in stopping Iran-Israel war, says West Asia strategist Awwad
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Mint
33 minutes ago
- Mint
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