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India's Q4 FY25 GDP growth 6.8%, inflation at 69-month low: Ind-Ra

15 May '25

3 min read

India's Q4 FY25 GDP growth 6.8%, inflation at 69-month low: Ind-Ra

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Insights

India's GDP growth is estimated at 6.8 per cent YoY in Q4 FY25, driven by strong private consumption and services.
Ind-Ra expects FY25 GDP growth at 6.3 per cent.
Retail inflation hit a 69-month low of 3.2 per cent in April, boosting demand.
Industrial growth slowed to 4 per cent, while exports rose 6.1 per cent and imports declined 2.7 per cent due to weak commodity prices.

India’s gross domestic product (GDP) growth is estimated to have reached 6.8 per cent year-over-year (YoY) in the fourth quarter (Q4) of fiscal (FY25), a four-quarter high, according to Fitch’s India Ratings and Research (Ind-Ra). The growth was primarily driven by private consumption, supported by sustained positive real rural wage growth.

Ind-Ra has projected retail inflation to have eased to a 69-month low of 3.2 per cent in April 2025, the lowest since July 2019. Wholesale inflation is also expected to have moderated to 1.4 per cent from 2 per cent in March 2025, according to its latest report.

The sharper-than-anticipated fall in retail inflation supported consumption demand. Despite strong Q4 performance, Ind-Ra has revised India’s FY25 GDP growth forecast slightly downward to 6.3 per cent from 6.4 per cent, while GVA growth is estimated at 6.4 per cent for Q4 and 6.3 per cent for the full fiscal.

The retail inflation stood at 3.7 per cent in Q4 FY25, dipping below the 4 per cent target for the first time after a gap of 21 quarters.

Ind-Ra expects industrial sector growth to have moderated to 4 per cent YoY in Q4 FY25, largely due to subdued performance in manufacturing and mining. Manufacturing sector growth is projected at 2.5 per cent, reflecting a slowdown in output, while mining is expected to grow by 2.0 per cent. Meanwhile, electricity and construction sectors are likely to have posted stable growth of 5 per cent and 7.1 per cent, respectively, during the same period.

“From the demand side, private consumption is a leading growth driver due to sustained positive real rural wage growth. The resilient services sector along with the satisfactory rabi harvest led to strong growth in the agricultural sector; this propelled GDP growth from the supply side during 4Q FY25,” said Paras Jasrai, economist & associate director, Ind-Ra.

Exports growth (goods and services) is projected to have moderated to 6.1 per cent YoY in Q4 FY25 from a 10-quarter high of 10.4 per cent YoY in Q3 FY25. It continued to be led by services exports which grew sharply (in rupee terms) at 19 per cent YoY, while merchandise exports (in rupee terms) were down 0.1 per cent YoY in Q4 FY25, due to low commodity prices.

Imports (goods and services) are expected to decline 2.7 per cent YoY in Q4 FY25, the most in FY25. While goods imports growth fell to 5.6 per cent YoY (in rupee terms), services imports growth decreased to 8.8 per cent YoY (in rupee terms) in Q4 FY25, each at a four-quarter low.

Fibre2Fashion News Desk (SG)

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