India’s GDP growth hits 4-year low of 6.5% in FY25

India's economic growth slowed to 6.5 per cent in the financial year 2024-25, the lowest pace of expansion since the Covid pandemic hit in 2020-21, dragged by subdued private investments and global uncertainties, according to official data released on Friday.

This was despite a better-than-expected performance in the January-March 2025 period. The country’s gross domestic product (GDP) growth accelerated to 7.4 per cent in the quarter ended March, the fastest pace of quarterly expansion recorded during 2024-25.

Despite the slowdown, Finance Minister Nirmala Sitharaman said India has maintained its position as the fastest-growing major economy in the world.

India’s real GDP rose to Rs 187.97 lakh crore in 2024-25 from Rs 176.51 lakh crore in the previous year, registering a growth of 6.5 per cent, as per data released by the National Statistics Office (NSO).

Nominal GDP or GDP at current prices increased by 9.8 per cent to Rs 330.68 lakh crore in the year ended March 2025.

Crisil Chief Economist Dharmakirti Joshi said the size of India's economy in dollar terms increased to $3.9 trillion in 2024-25 from $3.6 trillion in the previous year.

“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 annual investment growth above GDP growth,” Joshi said.

During the financial year 2023-24, India’s annual GDP growth stood at 9.2 per cent. The FY25 growth number is the lowest in four years.

Addressing a media briefing Chief Economic Advisor V Anantha Nageswaran said India has maintained the growth trajectory despite global uncertainties. “It is not just the growth number but how India’s growth is holding up in a difficult global environment that matters,” he said.

Nageswaran said India’s economic growth is estimated to remain in the range of 6.3 to 6.8 per cent in the current financial year, as projected in the Economic Survey.

During the FY25, growth in private consumer spending jumped to 7.2% from 5.6 per cent in the previous year. According to analysts, it was led by improved rural demand on the back of moderating food prices and higher spending during the festival season.

Agricultural sector growth accelerated to 4.6 per cent in FY25 from 2.7% in the previous year. However, manufacturing sector growth slumped to 4.5 per cent in 2024-25 from a robust 12.3 per cent expansion recorded in FY24.

“Primary sector has printed strong, essentially owing to a strong showing by agriculture that has supported the growth numbers. The manufacturing growth has printed weak and it is a matter of concern, especially given the trade-related disruptions and global economic slowdown expected in FY26,” said Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India.