India's growth momentum firm despite challenges: Finance ministry

27 Mar '25

1 min read

India's growth momentum firm despite challenges: Finance ministry

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Despite external challenges, India's economy is expected to grow at 6.5 per cent in FY25, driven by strong agricultural output and a resilient service sector, a department of economic affairs report said.
Retail inflation eased to 3.6 per cent in February this year—a seven-month low, while agricultural production estimates indicate continued stability, it said.
Employment trends stay stable.

Despite external challenges, India’s economy is expected to grow at 6.5 per cent in fiscal 2024-25 (FY25), driven by strong agricultural output and a resilient service sector, the monthly economic report of the finance ministry’s department of economic affairs said.

Economic growth in the fourth quarter (Q4) is expected to be supported by improved export growth, post-election government capital expenditure and economic activity linked to events like the Kumbh Mela, it said.

Retail inflation eased to 3.6 per cent in February this year—a seven-month low, while agricultural production estimates indicate continued stability, the report said.

The union government has maintained a balance between fiscal consolidation and growth, with the FY26 budget outlining a clear debt-reduction path. The fiscal deficit and expenditure targets remain aligned with estimates, reinforcing confidence in economic management, it noted.

Capital expenditure of the government is expected to pick up post-elections, further supporting economic activity, it said.

Employment trends remain stable, with the urban unemployment rate unchanged in Q3 FY25. Various employment outlook surveys indicate optimism and an increased willingness to hire in the coming quarter.

Risks remain, including geopolitical uncertainties, volatile commodity prices and financial market fluctuations.

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