India’s GDP growth in Q4 of FY25 is estimated at 6.8%

Economists estimate India’s Q4 FY25 GDP growth at 6.8%, driven by strong agricultural output and rising rural demand, though slightly below the RBI’s projection. Growth was also supported by inventory stocking ahead of possible U.S. tariffs. Easing inflation is expected to support stronger real growth. However, sluggish wage growth and lower savings continue to dampen urban consumption, slowing overall recovery.

India’s economy likely picked up pace in the fourth quarter (Q4) of FY25, mainly driven by strong agricultural output that boosted rural demand, according to an ET survey, involving 10 economists. The poll estimates GDP growth for FY25 at a median of 6.3%, slightly lower than the government’s forecast of 6.5% and the RBI’s projection of 6.6%.

For the January–March 2025 quarter, economists expect GDP to grow by 6.8% year-on-year, up from 6.2% in the previous December quarter. However, this remains below the RBI’s Q4 estimate of 7.2%. Part of the growth is attributed to inventory stocking by firms anticipating U.S. tariffs. Although the U.S. has delayed imposing a 26% duty on Indian goods for 90 days until July 9, a 10% baseline tariff is still in effect. A bilateral trade agreement between the two countries is under negotiation and may be announced in July.

Additional support to economic activity came from increased footfall and spending during the Maha Kumbh celebrations held in Prayagraj between January 13 and February 26. 

Rajani Sinha, chief economist at CareEdge Ratings, highlighted that both frontloading of inventories and religious tourism contributed to Q4 resilience.

Ms Radhika Rao, senior economist at DBS Bank stated, “Catch-up in government spending, consumption pick-up on easing inflation, stronger farm output and positive lead indicators on rural demand are expected to help growth trends.” 

Inflation was relatively subdued in Q4, with wholesale and retail inflation averaging 2.3% and 3.7%, respectively — down from 2.5% and 5.6% in Q3. Despite this, signs of a full economic recovery remain mixed. High-frequency indicators point to weak capital expenditure, subdued urban demand, and muted corporate earnings.

While rural consumption has started to recover, urban spending continues to trail. The National Statistical Office (NSO) is set to release the official Q4 GDP figures and provisional FY25 estimates on May 30, providing further clarity on the economic outlook.