India’s GDP posted a surprisingly solid growth of 7.4% in Q4 FY25, a one year high. GVA growth, capturing underlying economic activity was in line with expectations, at 6.8% in Q4FY25.
Download ReportQuantEco Research || Q4 and FY25 GDP - Domestic anchors amidst global currents
While Q4 FY25 GDP data did offer much-needed exuberance, a panoramic view of growth over the four quarters of FY25 paints a sober picture. GVA and GDP growth for FY25 at 6.4% and 6.5% respectively, mark a sizeable slowdown vs. FY24 growth of 8.6% and 9.2% respectively. Looking ahead, we remain reasonably confident on domestic growth drivers anchoring India’s growth prospects in FY26, amidst global currents. Consumption, is likely to find support in predicted above normal monsoon, deceleration in CPI inflation to possibly below 4.0% led by food prices, complete rollout of new direct income cash transfer schemes, regulatory and monetary easing and budget’s reduction of personal income taxes. This is likely to be aided by government’s capex spends and lower global commodity prices, even as private sector investment remains feeble amidst an uncertain global environment.
As such, we hold on to our FY26 GDP growth forecast of 6.4%, with downside risks, possibly manifesting from – 1) Longevity of global trade disruption, 2) Structure of India-US Bilateral Trade Agreement, 3) Financial market volatility and 4) Geopolitical risks