Robust GDP growth in FY25 because of good domestic consumption & government investment: Economists

India Gazette

4 days ago

New Delhi [India], May 31 (ANI): The robust GDP numbers of the Indian economy in the fourth quarter of the fiscal year 2025 are because of good domestic consumption, government investment, and relatively lower dependence on exports, say experts reacting to the numbers.
Manoranjan Sharma, Chief Economist at Infomeric Valuations and Ratings said 'India's economy rose by 6.5 per cent in FY 25, in line with the estimates making it once again the world's fastest-growing major economy. This strengthens the thought that India is once again one of the fastest-growing major economies in the world. Growth outlook has remained robust because of the domestic consumption, govt investment and relatively lower dependence on exports.'
India's economy grew by 7.4 per cent in the January-March quarter (Q4) of FY25, beating expectations and marking the strongest quarterly growth of the fiscal year. This was a sharp rise from the 6.2per cent recorded in the previous quarter.
The Reserve Bank of India (RBI) had forecast 7.2 per cent growth for Q4 and 6.6 per cent for the full FY25 in its last monetary policy meeting. For FY26, the central bank has projected 6.5 per cent growth, citing expected improvement in private consumption and steady investment activity.
Ranen Banerjee, Partner and Leader, Economic Advisory at PwC India, noted that the 6.5% growth for FY25 is a strong outcome despite global headwinds.
He said 'The manufacturing growth has printed weak and it is a matter of concern, especially given the trade-related disruptions and global economic slowdown expected in FY26'.
Banerjee also pointed out that Gross Fixed Capital Formation rose by 8.8 per cent, possibly due to increased private capex, as government capital expenditure did not rise significantly over the previous year.
Anshuman Magazine, Chairman & CEO of CBRE India, Southeast Asia, Middle East & Africa, said the growth beat expectations and showed resilience. He credited the rise to strong domestic demand, a recovery in rural markets, and activity in the industrial sector.
He said 'The growth highlights strong domestic demand, rural market recovery, and an active industrial sector. The economy's adaptability is evident in the broad industry growth'.
He also noted that growth in the construction and financial sectors has helped the real estate market by boosting investments and homebuyer confidence.
Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the Q4 growth partly reflects back-loaded government spending, mainly through public capital expenditure.
She noted that capital formation remained steady, but FY26 could face challenges due to global uncertainties affecting investment sentiment and softer urban income weighing on private consumption.
Overall, experts agree that India's economic growth in FY25 has been resilient, driven by domestic factors, though risks remain for the upcoming year due to global and domestic challenges. (ANI)