Data Alert
Govt capex pushes India Q4 GDP growth to 4-quarter high of 7.4%
This story was originally published at 17:50 IST on 30 May 2025
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--India Jan-Mar GDP growth at 7.4%
--Informist poll estimated India Jan-Mar GDP growth at 6.8%
--India Jan-Mar GDP growth 7.4% vs 8.4% year ago
--Govt leaves FY25 GDP growth estimate unchanged at 6.5%
--India FY25 GVA growth 6.4% vs 8.6% FY24
--India lowers FY25 nominal GDP growth estimate to 9.8% from 9.9%
--India Jan-Mar GVA growth 6.8% vs 7.3% year ago
--India Jan-Mar agriculture sector growth 5.4% vs 0.9% year ago
--India Jan-Mar mining sector growth 2.5% vs 0.8% year ago
--India Jan-Mar manufacturing sector growth 4.8% vs 11.3% year ago
--India Jan-Mar construction sector growth 10.8% vs 8.7% year ago
--India Jan-Mar industry growth 6.5% vs 9.5% year ago
--India Jan-Mar services sector growth 7.3% vs 7.8% year ago
--India Jul-Sept GDP growth revised to 5.6% vs 5.6?rlier
--India Oct-Dec GDP growth revised to 6.4% vs 6.2?rlier
--India Jan-Mar private consumption growth 6.0% vs 6.2% year ago
--India Jan-Mar gross fixed capital formation growth 9.4% vs 6.0% year ago
--India Jan-Mar govt consumption expenditure growth -1.8% vs 6.6% year ago
NEW DELHI - India's GDP growth rose to a four-quarter high of 7.4% in the quarter ended March, thanks to higher government capital expenditure and a pick-up in construction activity, data released by the statistics ministry Friday showed. The Indian economy had grown 8.4% in the March quarter of the previous year.
The growth print was higher than expectations. According to an Informist poll, GDP growth in the March quarter was seen rising to 6.8%. The Jan-Mar growth print was, however, slightly lower than the government's previous implied estimate of 7.6%.
The gross value added--which economists consider a more reliable indicator of economic activity than GDP--grew 6.8% in Jan-Mar, the highest in four-quarters, but 60 basis points lower than GDP growth. This is the biggest difference between GDP growth and gross value added growth since Jan-Mar 2024 and was caused by a sharp rise in net taxes.
Net taxes, the difference between indirect taxes and subsidies, rose 12.7% on year in Jan-Mar. As GDP is calculated by adding net taxes to gross value added, GDP growth is much higher than the gross value added growth.
The government raised the GDP growth estimate for Oct-Dec to 6.4%, from 6.2?rlier. As a result, India's GDP growth during 2024-25 (Apr-Mar) was 6.5%, the lowest in four years.
The construction sector grew at a six-quarter high pace of 10.8% in Jan-Mar and the manufacturing sector expanded 4.8% compared with 3.6% in Oct-Dec. Overall, industry grew 6.5% in Jan-Mar compared with 4.8% in the previous quarter. Farm sector growth moderated to 5.4% in the March quarter from 6.6% in Oct-Dec.
The services sector expanded 7.3% in the quarter ended March, a tad lower than 7.4% in Oct-Dec. The high growth in services sector was led by the 'financial, real estate, and professional services' and 'public administration, defence, and other services' segments, which rose 7.8% and 8.7%, respectively.
On the expenditure side, growth was led by a 9.4% rise in gross fixed capital formation, which largely reflects higher government capital expenditure. However, private final consumption expenditure growth eased to 6.0% in Jan-Mar from 8.1% in Oct-Dec, suggesting private consumption likely remained uneven. Government final consumption expenditure contracted in Jan-Mar after a gap of two quarters.
"While FY26 has begun with heightened uncertainty around global trade policies, the outlook for domestic drivers of growth, including private consumption and government investment appears largely resilient, given the personal income tax relief, monetary easing, expectations of an above normal monsoon and lower food inflation, and the healthy growth in budgeted capex of the GoI (government of India) and state governments," Aditi Nayar, ICRA's chief economist, said in a note. ICRA forecasts GDP growth to dip slightly to 6.2% in FY26.
The finance ministry earlier this week said that GDP growth will likely rise to 6.8% in FY26 on the back of government's direct tax exemptions and other fiscal measures, along with interest rate cuts by the Reserve Bank of India.
The following table shows quarterly growth in gross value added at basic prices and GDP for Jan-Mar and previous quarters of FY25 (in %):
| Sector | 2024-25 | |||
| Jan-Mar | Oct-Dec | Jul-Sept | Apr-Jun | |
| Agriculture | 5.4% | 6.6% | 4.1% | 1.5% |
| Industry | 6.5% | 4.8% | 3.8% | 8.5% |
| Mining | 2.5% | 1.3% | (-)0.4% | 6.6% |
| Manufacturing | 4.8% | 3.6% | 2.2% | 7.6% |
| Power and gas | 5.4% | 5.1% | 3.0% | 10.2% |
| Construction | 10.8% | 7.9% | 8.4% | 10.1% |
| Services | 7.3% | 7.4% | 7.2% | 6.8% |
| Trade, hotels | 6.0% | 6.7% | 6.1% | 5.4% |
| Financial services | 7.8% | 7.1% | 7.2% | 6.6% |
| Other services | 8.7% | 8.9% | 8.9% | 9.0% |
| GVA | 6.8% | 6.5% | 5.8% | 6.5% |
| GDP | 7.4% | 6.4% | 5.6% | 6.5% |
End
Reported by Shubham Rana
Edited by Akul Nishant Akhoury
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