Why India’s Economy Grew 6.5% in FY25 Despite Global Challenges
India has shown strong economic resilience. The country’s GDP grew by 6.5% in FY25. It remains the world’s fastest-growing major economy. This happened despite global problems, thanks to strong domestic demand, major government investments, and a solid performance in the last quarter.
FY25 GDP Highlights
- Full-Year Growth: 6.5%
- Q4 Growth (Jan–Mar 2025): 7.4%, beating the RBI’s forecast of 7.2%
- Key Drivers: High domestic spending, strong investments, and low export dependence
What Drove India’s Growth in FY25?
1. Strong Domestic Spending
Household spending and rural recovery boosted the economy. Manoranjan Sharma, Chief Economist at Infomeric Valuations, said, “India’s growth is strong due to domestic spending, government investments, and limited reliance on exports.”
2. More Private Investments
Private investments increased along with steady government spending. Gross Fixed Capital Formation rose by 8.8%, showing strong business confidence. Ranen Banerjee from PwC India called this a positive sign but warned that weak manufacturing could hurt growth in FY26.
3. Construction and Real Estate Growth
Anshuman Magazine from CBRE India said the construction and financial sectors grew. This boosted real estate and industrial activity. “Rural and industrial demand improved,” he added.
4. Government Spending Boost in Q4
Madhavi Arora from Emkay Global noted higher government spending in the last quarter. However, she warned that this boost may not last if global challenges get worse.
FY26 Outlook: Cautious but Hopeful
The RBI expects GDP growth to slow to 6.5% in FY26 because of:
- Global trade risks
- Weak urban spending
- Slow manufacturing
- Lower investment confidence
Still, if private spending and investments stay strong, India might keep leading global growth.
India’s Strong Home Market is Its Shield
India’s performance in FY25 shows how strong domestic fundamentals can help in tough times. As global troubles increase, attention will turn to the RBI’s next policy meeting in June to set future strategies.
Takeaway: India’s 6.5% growth in FY25 shows its economic strength. But FY26 will be a true test of resilience.
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