New Delhi: India’s economy expanded by 6.5 per cent in the financial year 2024-25 (FY25), with a strong showing in the final quarter boosting overall growth and lifting the country’s GDP to $3.9 trillion. The performance, aided by robust activity in manufacturing, construction, and private consumption, kept India on track as the fastest-growing major economy and positioned it to surpass Japan in economic size in the coming fiscal.
According to data released by the National Statistics Office (NSO) on Friday, the economy grew 7.4 per cent in the January-March 2025 quarter — the highest of the fiscal year. This was an improvement over the 6.4 per cent growth recorded in the previous quarter (October-December 2024), though lower than the 8.4 per cent expansion in the same quarter of the previous year.
The full-year growth of 6.5 per cent, in line with the government’s projection made earlier in February, marks the slowest rate in four years. This follows a 9.2 per cent expansion recorded in 2023-24. Still, it outpaces all major global economies, including China, which reported a growth of 5.4 per cent in the first three months of 2025.
“India is sustaining this growth as the fastest growing economy now for the fourth year continuously without a break,” said Finance Minister Nirmala Sitharaman. “Thanks to the work of small and medium, large industries, which are coming in and making sure our manufacturing capacity, our service capacity are all intact. Agriculture has also sustained us even during the Covid and subsequently.”
The size of the Indian economy rose to Rs 330.68 lakh crore, or approximately $3.9 trillion, from $3.6 trillion in FY24. India remains the fifth-largest economy globally, trailing only the United States, China, Germany, and Japan. With growth projected between 6.3 per cent and 6.8 per cent for the current fiscal, the country could overtake Japan, whose economy is valued at around $4.19 trillion.
Real GDP at constant prices reached Rs 187.97 lakh crore in FY25, up from Rs 176.51 lakh crore in FY24. Gross Value Added (GVA) — which measures economic output minus indirect taxes — increased by 6.4 per cent to Rs 171.87 lakh crore, while nominal GVA stood at Rs 300.22 lakh crore.
Construction led the growth in economic sectors with a 9.4 per cent year-on-year rise, followed by public administration, defence, and allied services at 8.9 per cent, and financial, real estate, and professional services at 7.2 per cent. The primary sector, including agriculture, forestry, and mining, posted a strong recovery, growing by 4.4 per cent in FY25 compared to 2.7 per cent a year earlier.
Chief Economic Adviser V Anantha Nageswaran said the provisional estimates aligned with expectations. “India’s growth is holding up in a growth-scarce environment,” he said. “India outshone other large and contemporary economies.”
For the ongoing fiscal, the government has maintained its growth outlook in the range of 6.3 per cent to 6.8 per cent. Nageswaran pointed to rural demand recovery and resilient services exports as likely contributors. Declining crude oil prices and easing food inflation are expected to support this momentum.
In the January-March 2025 quarter, manufacturing output rose 4.8 per cent year-on-year, up from a revised 3.6 per cent in the previous quarter. Construction activity surged 10.8 per cent, compared to 7.9 per cent in the prior period. Public administration services posted 8.7 per cent growth, reflecting the impact of government expenditure.
Private Final Consumption Expenditure (PFCE), a key component of domestic demand, grew by 7.2 per cent in Q4 FY25, improving from 5.6 per cent the previous year. Government final consumption expenditure, supported by public welfare schemes and defence-related spending, also contributed to growth, though specific figures were not provided.
The NSO stated that its GDP estimates were compiled from a broad set of indicators, including industrial production, corporate financial results, crop output, GST collections, and transportation data. Tax collections included both GST and non-GST sources, while expenditure and subsidies were drawn from central and state budgets.
The statistical body noted that these figures remain provisional and could be revised as more comprehensive data becomes available. It said revisions may occur if updates from source agencies lead to adjustments in the estimates. The next set of GDP numbers, covering the first quarter of FY26, is scheduled for release on August 29, 2025.
Despite the strong numbers, some external risks loom over the outlook. A global economic slowdown and trade policy uncertainties may affect momentum. A proposal by US President Donald Trump to impose 26 per cent tariffs on Indian imports remains pending, with talks continuing and a decision expected by July 9. Nevertheless, improved rural purchasing power, supported by timely monsoons and moderating food inflation, is expected to reinforce domestic consumption. Growth trends in fast-moving consumer goods (FMCG) also indicate stronger rural demand, which may further support the overall economic trajectory.