FY25 Real GDP grows at 6.5%, as Q4 growth improves to 7.4%

2 Jun 2025 , 10:03 AM

Q4FY25 GDP GROWTH FLATTERS ON THE UPSIDE

On the last day of May 2025, the MOSPI put out the Q4 and the fiscal year (FY25) GDP growth figures. FY25 GDP growth may have stayed at 6.5% for FY25, but the Q4 was the best in terms of real GDP growth at 7.4%. This is sharply higher than 6.5%, 5.6%, and 6.4% respectively in Q1, Q2, and Q3 of FY25. What were the big drivers of growth in Q4FY25?

Construction saw real growth of 10.8% in Q4FY25; followed by public services & defence at 8.7%, and financial services at 7.8%. Interestingly, primary sector growth (agriculture, forestry, mining, and quarrying) expanded 4.4% in Q4FY25, compared to 2.7% in Q4FY24. One key favourable trigger in Q4FY25 was the sharp fall in merchandise imports.

FY25 NOMINAL GVA AND NOMINAL GDP (PROVISIONAL ESTIMATE)

Real GDP may be the standard measures of economic growth, but nominal GDP (pre-inflation) is a barometer of jobs, fiscal deficit, and economic activity.

Sector	FY23 (₹ in Crore)	FY24 (₹ in Crore)	FY25 (₹ in Crore)	YOY (%) FY24	YOY (%) FY25
Primary Sector	49,60,015	54,10,210	59,26,078	9.1%	9.5%
Agriculture, Livestock, Forestry	44,49,332	48,77,867	53,85,291	9.6%	10.4%
Mining & Quarrying	5,10,682	5,32,343	5,40,788	4.2%	1.6%
Secondary Sector	63,15,335	70,89,650	76,03,402	12.3%	7.2%
Manufacturing	35,34,867	39,21,596	41,69,419	10.9%	6.3%
Electricity, Gas, Utility Services	6,09,068	7,66,435	8,06,974	25.8%	5.3%
Construction	21,71,401	24,01,618	26,27,009	10.6%	9.4%
Tertiary Sector	1,33,71,348	1,49,13,028	1,64,92,552	11.5%	10.6%
Trade, Hotels, Transport	44,12,008	48,28,505	52,57,396	9.4%	8.9%
Financial, Professional Services	56,00,439	62,44,153	68,81,866	11.5%	10.2%
Public Administration, Defence	33,58,901	38,40,370	43,53,290	14.3%	13.4%
Nominal Gross Value Added (GVA)	2,46,46,698	2,74,12,888	3,00,22,033	11.2%	9.5%
Nominal Gross Domestic Product (GDP)	2,68,90,473	3,01,22,956	3,30,68,145	12.0%	9.8%

Data Source: MOSPI

There are key takeaways from nominal GDP data. Firstly, nominal GDP growth and nominal GVA growth at 9.8% and 9.5% were impressive. Data shows that inflation has substantially stabilized. What were the big drivers of nominal GDP growth in FY25? In the primary sector, while mining suffered, the agricultural output was better in FY25, as compared to FY24.

Manufacturing fell 460 bps in nominal terms to 6.3% in FY25; largely due to weak capex spending in last two years. Growth in electricity output fell 80% in FY25 in nominal terms compared to FY24. Services growth was lower compared to FY24; but it helped FY25 close with a respectable figure. Overall, FY25 was better in agriculture but modest in key services and construction. However, it was core manufacturing that lagged in FY25.

REAL GVA AND REAL GDP FOR FY25 (PROVISIONAL ESTIMATES)

The table below captures the sector wise break up of real GDP (net of inflation) for FY25, juxtaposed with FY24 and FY23.

Sector	FY23 (₹ in Crore)	FY24 (₹ in Crore)	FY25 (₹ in Crore)	YOY (%) FY24	YOY (%) FY25
Primary Sector	26,25,711	26,97,294	28,15,689	2.7%	4.4%
Agriculture, Livestock, Forestry	23,05,978	23,67,287	24,76,805	2.7%	4.6%
Mining & Quarrying	3,19,733	3,30,007	3,38,884	3.2%	2.7%
Secondary Sector	41,70,940	46,46,499	49,31,228	11.4%	6.1%
Manufacturing	25,16,364	28,25,935	29,53,647	12.3%	4.5%
Electricity, Gas, Utility Services	3,52,331	3,82,776	4,05,296	8.6%	5.9%
Construction	13,02,245	14,37,788	15,72,285	10.4%	9.4%
Tertiary Sector	80,81,377	88,07,683	94,40,529	9.0%	7.2%
Trade, Hotels, Transport	27,85,740	29,94,536	31,76,830	7.5%	6.1%
Financial, Professional Services	34,59,277	38,14,586	40,88,072	10.3%	7.2%
Public Administration, Defence	18,36,360	19,98,561	21,75,628	8.8%	8.9%
Real Gross Value Added (GVA)	1,48,78,028	1,61,51,477	1,71,87,446	8.6%	6.4%
Real Gross Domestic Product (GDP)	1,61,64,913	1,76,50,591	1,87,96,955	9.2%	6.5%

Data Source: MOSPI

Real GDP growth at 6.5%, was lower than previous years, but not disappointing. Firstly, it is on a higher base and secondly, it comes amidst tumult in global markets and policy flux. The big gains in FY25, in real terms, came from agriculture. Real farm growth is 190 bps higher at 4.6% in FY25. Manufacturing has taken a sharp hit in FY25, falling from 12.3% to 4.5%; largely due to weak capex. Of course, the construction sector has been robust, while government did its bit through spending on public services and defence.

The moral of the story is; at 6.5%, real growth in India is still enviable. Among the global large economies, India remains the fastest growing; for the fourth year in a row!