India GDP Grows Faster Than Expected, Latest Figures Show

India’s economy grew at a faster-than-expected pace of 7.4% in the January-March quarter, up from 6.2% in the previous quarter, according to newly released government data. The strong quarterly performance defied analysts’ projections and reinforces India’s position as the world’s fastest-growing major economy.

Despite the robust start to the year, the country’s overall growth for the 2024-25 financial year – running from April to March – is forecast to slow to 6.5%, its weakest rate in four years.

The Reserve Bank of India is scheduled to meet in June and is widely expected to implement a third consecutive rate cut aimed at stimulating growth amid softening global conditions.

The uptick in GDP during the first quarter was driven by a combination of strong agricultural output, increased government spending, and improved rural demand. However, private sector investment and manufacturing activity remained subdued, limiting broader economic momentum.

Economists say rural areas saw a boost from a solid winter harvest, but that has not been enough to offset sluggish urban consumption, weighed down by high unemployment and stagnant wages.

Government-led infrastructure development – particularly in roads, ports, and transportation – continues to serve as the primary engine of growth in the absence of strong private capital expenditure.

Looking ahead, experts anticipate domestic growth could get a lift from recent income tax cuts unveiled in the federal budget, along with expected monetary easing, lower food inflation, and a favorable monsoon season.

However, international uncertainties could cast a shadow over export performance. Tensions remain high as India negotiates a trade deal with the United States. In April, President Donald Trump imposed tariffs of up to 27% on Indian exports, with the 90-day reprieve on those levies set to expire on July 9.

Analysts expect India’s economic expansion to decelerate further to 6% in the 2025-26 financial year, amid weakening global demand and concerns that delayed private investment could hamper growth.

The International Monetary Fund (IMF) projects global economic growth will dip to 2.8% in 2025 and 3% in 2026, adding pressure on emerging economies like India.

Meanwhile, foreign investment sentiment has cooled. Net FDI into India fell to just $350 million in 2024–25 – its lowest in 20 years – due to rising outbound investments and profit repatriations by Indian firms.

The government has been working to position India as a global manufacturing alternative to China. Although tech giant Apple recently confirmed plans to move more iPhone production from China to India, some trade analysts warn that recent tariff rollbacks between the US and China could slow the momentum of such strategic shifts.

As India eyes long-term economic transformation, balancing domestic policy with volatile global conditions remains critical.