DC Edit | Resilient India Springs Surprise
This growth rate cements India’s position as the fastest-growing large economy and underscores its economic resilience. It also strengthens the prospects of India emerging as the world’s fourth-largest economy by the end of the current financial year
The Indian economy has once again surprised everyone with its better-than-expected growth numbers in April-June 2025. GDP growth climbed to a five-quarter high of 7.6 per cent, slightly higher than the 7.4 per cent recorded in the preceding quarter. It is also 110 basis points above the Reserve Bank of India’s forecast of 6.5 per cent.
This growth rate cements India’s position as the fastest-growing large economy and underscores its economic resilience. It also strengthens the prospects of India emerging as the world’s fourth-largest economy by the end of the current financial year.
Services sector activity, which expanded at a two-year high of 9.3 per cent despite global uncertainties, was the key contributor to this robust performance. The services boom reflects broad-based strength in trade, transport, finance, real estate, and even public administration, all of which registered significant gains.
Manufacturing too has staged a turnaround, growing at 7.7 per cent, while agriculture posted a steady 3.7 per cent. Although early rainfall in June hurt mining, utilities, and construction, overall GVA growth still stood at 7.6 per cent — a six-quarter high.
However, it is important to temper optimism because part of the real GDP growth was aided by low inflation, which made the deflator unusually benign. Nominal GDP growth was 8.8 per cent, the lowest in three quarters.
Buoyed by recent income-tax cuts and the government’s front-loading of investments, consumption grew by seven per cent. Proposals to restructure GST slabs and boost infrastructure investment could further support consumption.
For the medium term, however, the government must deftly manage the rift with the United States over trade deals and the purchase of Russian crude oil, while also ensuring India does not get embroiled in global bloc competition.
