India's Q4FY25 GDP Surges to 7.4%, Exceeding Expectations

India’s Q4 GDP growth has come in at a 4-quarter high of 7.4 per cent, surpassing expectations and outpacing the previous quarter-on-quarter rate of 6.4 per cent. In FY25, the Indian economy grew by 6.5 per cent, 5.6 per cent, and 6.2 per cent in the June, September, and December quarters, respectively.

The GDP rate, however, is well below the 8.4 per cent print in the same period last year, while nominal GDP rose by 10.8 per cent year-on-year. According to provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), on Thursday, May 30, India’s economy is expected to grow at 6.5 per cent in real terms in the financial year 2024–25, while nominal GDP is projected to expand by 9.8 per cent.

Construction emerged as a major driver of growth, clocking an annual rise of 9.4 per cent. This is followed by 8.9 per cent growth in public administration, defence, and other services, and a 7.2 per cent rise in financial, real estate, and professional services. In Q4 alone, the construction sector surged by 10.8 per cent, highlighting continued momentum in infrastructure and housing activity.

Agriculture and allied activities have also seen a healthy turnaround, with 4.4 per cent growth in FY 2024–25, compared to 2.7 per cent in the previous year. Its Q4 growth reached 5.0 per cent, a significant jump from just 0.8 per cent in the same period last year. Private consumption and investments are also showing strength. Private Final Consumption Expenditure (PFCE) grew by 7.2 per cent during the fiscal, up from 5.6 per cent in FY 2023–24. Gross Fixed Capital Formation (GFCF), a key indicator of investment, rose by 7.1 per cent annually and a strong 9.4 per cent in Q4.

Real Gross Value Added (GVA) is estimated at Rs 171.87 lakh crore in FY 2024–25, registering a 6.4 per cent increase from the revised estimate of Rs 161.51 lakh crore for FY 2023–24. Nominal GVA is expected to reach Rs 300.22 lakh crore, up 9.5 per cent from Rs 274.13 lakh crore last year.

A higher-than-expected growth indicates that the economy has recovered from the slowdown seen in the middle of last year, said Sakshi Gupta, an economist at HDFC Bank to Reuters. “Given global headwinds, the central bank is expected to remain growth supportive” and cut rates by a quarter-point in its next meeting, she said.

Real GDP or GDP at constant prices in Q4 of FY 2024–25 is estimated at Rs 51.35 lakh crore, up from Rs 47.82 lakh crore in Q4 of FY 2023–24, registering a growth rate of 7.4 per cent. Nominal GDP or GDP at current prices during the same quarter is estimated at Rs 88.18 lakh crore, compared to Rs 79.61 lakh crore in the corresponding period last year, showing a growth rate of 10.8 per cent.

Similarly, real Gross Value Added (GVA) in Q4 of FY 2024–25 is estimated at Rs 45.76 lakh crore, against Rs 42.86 lakh crore in Q4 of FY 2023–24, recording a growth rate of 6.8 per cent. Nominal GVA for the quarter stood at Rs 79.46 lakh crore, up from Rs 72.51 lakh crore last year, reflecting a growth of 9.6 per cent.