Robert Besser
03 Jun 2025

NEW DELHI, India: India's economy hit a four-year low of 6.5 percent, lifted by an impressive fourth-quarter growth at 7.4 percent.

The Reserve Bank of India had projected 6.5 percent GDP growth for the fiscal year 2024-2025. In 2023-2024, India's GDP grew by an impressive 9.2 percent, continuing to be the fastest-growing major economy.

According to official data, the economy grew 8.7 percent and 7.2 percent, respectively, in 2021-2022 and 2022-2023.

In a March 2025 report, the Ministry of Finance anticipated that the Indian economy would achieve a growth rate of 6.5 percent in 2024-2025 despite considerable external headwinds.

India's economy grew faster in the January–March period, helped by stronger demand in villages and more government spending. However, private companies held off on new investments because of global uncertainty.

Earlier, economists in a Reuters poll expected India's GDP to have grown 6.7 percent compared to the same time last year. This is higher than the 6.2 percent growth in the previous three months.

Gaura Sen Gupta, chief economist at IDFC First Bank, said rural spending improved, but urban demand showed mixed signs. She also said government spending helped support investment.

GDP includes taxes and subsidies, which can change a lot. GVA removes those to give a clearer picture.

JP Morgan expected GDP to grow 7.5 percent in the March quarter, but GVA will grow 6.7 percent, up from 6.2 percent in the quarter before.

India's central bank expected GDP to grow 6.5 percent in the new financial year that started on April 1. At this pace, India would remain the fastest-growing major economy and could reach the size of Japan's economy this year, around $4.18 trillion, according to the IMF.

Even though the global economy is facing problems like trade tensions, India seems less affected. This is because it doesn't rely as much on international trade, and the government has cut taxes and kept interest rates low.

Kaushik Das of Deutsche Bank said that both the government and the central bank are working closely to support growth and are ready to take decisive action if needed.

Retail inflation fell to 3.16 percent in April, the lowest in nearly six years. With a good monsoon expected, food prices should stay stable. This could lead the central bank to cut interest rates again in June.

The finance ministry said that tax cuts, recent government measures, and expected central bank rate cuts could help the economy grow by 6.3 percent to 6.8 percent this year.