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Economic Times
3 days ago
- Business
- Economic Times
At 7.4%, India's growth steps on race pedal in Q4
India's economy surpassed expectations with a 7.4% growth in the March quarter, boosting FY25 growth to 6.5%. Investment recovery and strong construction drove this expansion, despite concerns about tepid urban demand and global uncertainties. While marking a four-year low, India remains the fastest-growing economy, poised to become the fourth largest, with economists projecting continued growth around 6.5%. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Urban Demand an Issue India's economy expanded faster than expected at a four-quarter high of 7.4% in the March quarter from a year earlier, lifting overall growth in FY25 to 6.5%, data released on Friday showed. The high growth belied concerns about a softer print amid risks from higher US tariffs, as a recovery in investment and a stronger construction sector propped up the ET poll conducted earlier this month had pegged growth at a median 6.8% for the quarter and 6.3% for risks to growth include tepid urban consumer demand , muted private investment demand and a volatile global environment. India has held its own in a 'growth-scarce' post-Covid global environment amid rising uncertainties due to political conflicts and trade tensions, said chief economic advisor V Anantha Nageswaran To be sure, the full-year gross domestic product (GDP) growth of 6.5% marks a four-year low. India's GDP had grown 9.2% in FY24. Despite the slowdown, India was the fastest-growing economy in the year and is on course to become the fourth largest later this year, overtaking nominal GDP growth rate was 9.8% in FY25 against a 12% rise in FY24, indicating a broadbased decline in inflation. The gross value added (GVA) grew 6.8% in the fourth quarter and 6.4% in economy had grown 6.4% in the December quarter and 8.4% in the year-earlier period. Gross fixed capital formation, an indicator of investment, rose 7.1% in FY25 and 9.4% in the March quarter. 'Real GDP was expected to fare strongly, partly due to a boost from net indirect taxes,' said Radhika Rao, senior economist at DBS Bank.'A catch-up in government spending, accompanied by betterperforming construction output, has lifted the headline figure,' Rao grew 5.4% in the fourth quarter, compared with 6.6% in Q3 and 0.9% a year ago. Manufacturing sector growth was 4.8% in the three months ended March, lower than 11.3% in Q4 of the previous year. Construction output surged 10.8% driven by high government capex. The 60 basis point gap between GDP and GVA in the fourth quarter was due to higher net indirect taxes, which rose 12.7%.However, private consumption growth eased to a five-quarter low of 6% while government final consumption expenditure contracted 1.8% in the fourth quarter after a gap of two quarters. 'The unevenness witnessed in the consumption recovery remains a critical monitorable going forward,' said Rajani Sinha, chief economist, CareEdge Ratings. 'The softness in urban demand continues to be an area of concern.'Economists said private sector participation in investment hanot yet taken off on a durable basis across sectors and, going ahead, India's FY26 GDP growth is estimated at 6-6.6%.US President's Donald Trump tariff threats also loom large. 'The reciprocal tariff is casting its shadow over global GDP and trade growth, which may force investors to postpone their investment decisions,' said Paras Jasrai, associate director, India Ratings and Research, adding that the investment outlook is still expects growth to stabilise around the 6.5% level at the start of FY26, supported by farm output, lower inflation and monetary easing, as well as continued public external uncertainties could have an impact through trade and investment channels. 'We believe that the Indian economy is poised to remain the fastest-growing major economy in FY26 (GDP growth expected at 6.3-6.5%) by leveraging its sound macroeconomic fundamentals, robust financial sector and commitment towards sustainable growth,' said Soumya Kanti Ghosh, group chief economic adviser, State Bank of India
Time of India
3 days ago
- Business
- Time of India
At 7.4%, India's growth steps on race pedal in Q4
India's economy surpassed expectations with a 7.4% growth in the March quarter, boosting FY25 growth to 6.5%. Investment recovery and strong construction drove this expansion, despite concerns about tepid urban demand and global uncertainties. While marking a four-year low, India remains the fastest-growing economy, poised to become the fourth largest, with economists projecting continued growth around 6.5%. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Urban Demand an Issue India's economy expanded faster than expected at a four-quarter high of 7.4% in the March quarter from a year earlier, lifting overall growth in FY25 to 6.5%, data released on Friday showed. The high growth belied concerns about a softer print amid risks from higher US tariffs, as a recovery in investment and a stronger construction sector propped up the ET poll conducted earlier this month had pegged growth at a median 6.8% for the quarter and 6.3% for risks to growth include tepid urban consumer demand , muted private investment demand and a volatile global environment. India has held its own in a 'growth-scarce' post-Covid global environment amid rising uncertainties due to political conflicts and trade tensions, said chief economic advisor V Anantha Nageswaran To be sure, the full-year gross domestic product (GDP) growth of 6.5% marks a four-year low. India's GDP had grown 9.2% in FY24. Despite the slowdown, India was the fastest-growing economy in the year and is on course to become the fourth largest later this year, overtaking nominal GDP growth rate was 9.8% in FY25 against a 12% rise in FY24, indicating a broadbased decline in inflation. The gross value added (GVA) grew 6.8% in the fourth quarter and 6.4% in economy had grown 6.4% in the December quarter and 8.4% in the year-earlier period. Gross fixed capital formation, an indicator of investment, rose 7.1% in FY25 and 9.4% in the March quarter. 'Real GDP was expected to fare strongly, partly due to a boost from net indirect taxes,' said Radhika Rao, senior economist at DBS Bank.'A catch-up in government spending, accompanied by betterperforming construction output, has lifted the headline figure,' Rao grew 5.4% in the fourth quarter, compared with 6.6% in Q3 and 0.9% a year ago. Manufacturing sector growth was 4.8% in the three months ended March, lower than 11.3% in Q4 of the previous year. Construction output surged 10.8% driven by high government capex. The 60 basis point gap between GDP and GVA in the fourth quarter was due to higher net indirect taxes, which rose 12.7%.However, private consumption growth eased to a five-quarter low of 6% while government final consumption expenditure contracted 1.8% in the fourth quarter after a gap of two quarters. 'The unevenness witnessed in the consumption recovery remains a critical monitorable going forward,' said Rajani Sinha, chief economist, CareEdge Ratings. 'The softness in urban demand continues to be an area of concern.'Economists said private sector participation in investment hanot yet taken off on a durable basis across sectors and, going ahead, India's FY26 GDP growth is estimated at 6-6.6%.US President's Donald Trump tariff threats also loom large. 'The reciprocal tariff is casting its shadow over global GDP and trade growth, which may force investors to postpone their investment decisions,' said Paras Jasrai, associate director, India Ratings and Research, adding that the investment outlook is still expects growth to stabilise around the 6.5% level at the start of FY26, supported by farm output, lower inflation and monetary easing, as well as continued public external uncertainties could have an impact through trade and investment channels. 'We believe that the Indian economy is poised to remain the fastest-growing major economy in FY26 (GDP growth expected at 6.3-6.5%) by leveraging its sound macroeconomic fundamentals, robust financial sector and commitment towards sustainable growth,' said Soumya Kanti Ghosh, group chief economic adviser, State Bank of India
Time of India
3 days ago
- Business
- Time of India
7.4% GDP growth in Jan-Mar pushes FY25 figure to 6.5%
Representative image NEW DELHI: India's economy grew faster than expected at 7.4% in the Jan-March quarter, led by robust growth in agriculture and construction. The strong quarterly showing - the fastest in the fiscal year - pushed overall growth in 2024-25 to 6.5%, according to data released by the National Statistics Office. The Jan-March figure outperformed the upwardly revised 6.4% in the Oct-Dec period, and pointed to robust momentum in the fourth quarter amid global uncertainty. India remained the fastest growing major economy in the March quarter, followed by China at 5.4% and Indonesia at 4.9%. The full-year growth estimate was in line with expectations and the second advance estimate, but the lowest in 4 years, on the back of 9.2% expansion in the previous year. Chief economic adviser V Anantha Nageswaran Friday said robust domestic demand has supported GDP growth and private consumption share has risen to the highest level since FY04. "Govt retains its outlook on FY26 growth at 6.3-6.8%, with private consumption, especially the rural rebound, and resilient services exports as the key drivers," Nageswaran said in a presentation after the data was released. Multiple agencies project India's growth to be in the range of 6.3-6.7% this year, he said. The Jan-Mar quarter data showed the farm sector remaining robust with growth of 5.4% while the construction sector grew 10.8% in the same period. The services sector remained steady at 7.3% in the March quarter compared with an expansion of 7.8% in the same year earlier quarter. The 6.5% growth for 2024-25 was attributed to a pickup in private consumption and investment while the acceleration in investment demand led to the sharp jump in the fourth quarter performance. "In line with expectations, real GDP registered 6.5% growth in fiscal 2025, elevating the Indian economy's size to $3.9 trillion from $3.6 trillion in fiscal 2024," said DK Joshi, chief economist at ratings agency Crisil. "Consumption growth outpaced GDP, primarily driven by robust rural demand supported by a strong agricultural sector. A sharp catchup in investment growth in the last quarter also brought investment growth above GDP growth. ... Net net we expect India's GDP to grow at 6.5% in fiscal 2026 with risks tilted downwards," said Joshi. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Business Standard
3 days ago
- Business
- Business Standard
India's GDP expands 7.4% in Q4 to meet annual growth estimates of 6.5%
India's economic growth rebounded to a four-quarter high of 7.4 per cent in the January-March period of 2024-25 (FY25), aligning with the annual growth estimate of 6.5 per cent, according to provisional estimates of gross domestic product (GDP) released by the National Statistics Office (NSO). The final-quarter performance outpaced expectations, beating both the Reserve Bank of India's (RBI's) forecast of 7.2 per cent and a Reuters poll of economists that had projected 6.7 per cent growth. Nominal GDP for the full financial year rose 9.8 per cent to ₹330.7 trillion, slightly above the ₹324.1 trillion estimated in the Union Budget. This boost helped the government perform marginally better on fiscal deficit, which stood at 4.77 per cent of GDP in FY25, against the revised estimate of 4.84 per cent. Gross value added (GVA) grew at a slower rate than GDP — at 6.8 per cent — in the March quarter, widening the gap between GDP and GVA due to a surge in net taxes (taxes minus subsidies), as government subsidy payouts contracted during the period. Now, economists believe uncertainty because of the tariff war triggered by US President Donald Trump's policies and weak urban demand will shape India's FY26 growth outlook, even as further policy rate cuts by the RBI will support economic recovery. 'The momentum of the economy, which picked up in the fourth quarter, is continuing into the first quarter (of FY26), and that's a good sign,' said V Anantha Nageswaran, chief economic advisor in the finance ministry, while briefing reporters after the release of GDP data. He said high-frequency indicators for April showed strong industrial and commercial activity, and noted that interest rate moderation and recent tax relief measures would likely support consumption. Sakshi Gupta, principal economist at HDFC Bank, noted that while FY25 GDP growth moderated from the previous year's 9.2 per cent, the economy recovered from the sluggish performance in the first half of FY25. 'Average growth for H2 stood at 6.9 per cent versus 6.1 per cent in H1FY25. Growth in the second half was supported by a rise in government capex and construction activity, healthy agriculture performance, and continued momentum in the service sector,' she said. Agriculture grew 5.4 per cent in the March quarter, buoyed by strong reservoir levels and robust rabi sowing. Manufacturing expanded 4.8 per cent — a three-quarter high rate — helped by subdued input cost inflation. The labour-intensive construction sector surged 10.8 per cent, marking a six-quarter high. The services sector expanded 7.3 per cent, with public administration, defence, and other government services leading the way with 8.7 per cent growth. However, segments like trade, transport, communication, and broadcasting recorded slightly slower growth at 6 per cent, down from 6.2 per cent a year earlier, despite the festival boost from events like the Mahakumbh. Financial, real estate, and professional services also slowed to 7.8 per cent from 9 per cent in the same quarter a year ago, possibly reflecting weaker credit and deposit growth. Public sector-driven services remained strong, as both central and state governments pushed to accelerate projects in the final three months of FY25. Net exports turned positive in the March quarter after three consecutive quarters of drag. 'The 8.3 per cent growth in exports in FY25 was mainly due to better performance of services, given that exports of goods were virtually flat,' said Madan Sabnavis, chief economist, Bank of Baroda. On the supply side, private final consumption expenditure growth moderated to 6 per cent, while government consumption spending declined 1.8 per cent, partly due to the high base of a year ago. Investment demand, measured through gross fixed capital formation, rose by 9.4 per cent in the March 2025 quarter. 'The seasonal rush by both Union and state governments to meet their capex targets, along with the private sector (there has been an increase in capex intentions based on the latest NSO survey data), appears to have provided succour to the investment demand in Q4FY25,' said Paras Jasrai, associate director, India Ratings. 'The pickup in investment demand is significant but needs to be watched for a sustainable trend in view of economic uncertainty and weak foreign investment demand as indicated by the net FDI inflow.' Rajani Sinha, chief economist, CareEdge Ratings, said the uneven pace of consumption recovery remained a key 'monitorable'. 'The strength in rural demand is expected to continue on the back of favourable monsoon prospects, healthy reservoir levels and upbeat agricultural output. However, the softness in urban demand continues to be an area of concern,' she said. Sinha also warned that despite the US placing reciprocal tariffs on hold for 90 days, global economic uncertainty was likely to persist. 'This is likely to weigh on the private investment impulses. Given this context, a broadbased and durable consumption recovery, along with a revival in the government's capex, becomes increasingly critical for a revival in the private capex cycle. Factoring all of these aspects, we expect GDP growth in FY26 to be 6.2 per cent,' she added.
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Business Standard
3 days ago
- Business
- Business Standard
Growth momentum to continue in Q1FY26 as India outshines key economies: CEA
India's FY25 GDP growth print of 6.5 per cent shows that the country continues to outperform many of the world's larger and key economies. Growth in FY26 is expected to be between 6.3 and 6.8 per cent, driven by private consumption, a rural rebound, and resilient services exports, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Friday. The CEA noted that if urban consumption picks up on the back of stronger capital formation, increased hiring, and improved compensation, India could reach the upper end of this range in FY26. He said the income tax relief announced in the Budget for FY26 will support consumption, and that high-frequency indicators for April 2025 show robust industrial and commercial activity. 'It's important to understand that globally, this is a growth-scarce environment. In spite of rising uncertainties due to geopolitical conflicts and trade tensions — which predate 2025 — India is holding up its growth numbers better than many advanced economies,' the CEA said. 'Interest rate moderation by the RBI and the tax relief provided by the government are expected to boost overall consumption. Capital formation by the private sector is also likely to improve, as capacity utilisation levels are high,' he said. On private sector investments, the CEA remarked that it is not as though private capex has been stagnant — but the growth rate has remained on the slower side. 'Given that India has a large domestic economy, the private sector can definitely invest more. But how much it will ramp up in this current environment is difficult to say,' he added. Nageswaran highlighted that while the external environment does not pose a funding risk for India, the country must increase its efforts to attract foreign direct investment (FDI) by integrating more deeply into global supply chains and leveraging the 'China plus one' strategy. He also said that declining crude oil prices could lower the import bill, create fiscal space, and ease external economic pressures. However, he warned that renewed financial market volatility could bring additional uncertainty, potentially weighing on growth. 'Diverging central bank rate paths globally may impact capital flows and financial markets,' Nageswaran said.
