India’s Q4 GDP Soars 7.4%: Experts credit domestic demand, govt push, warn of FY26 risks

India’s strong GDP growth in the fourth quarter of fiscal 2025 was driven by people spending more at home, steady government investment, and the country not relying too much on exports, according to experts reacting to the latest numbers.

India retains title of fastest-growing major economy

Manoranjan Sharma, Chief Economist at Infomeric Valuations and Ratings, said, “India’s economy rose by 6.5 per cent in FY25, in line with the estimates making it once again the world’s fastest-growing major economy. This strengthens the thought that India is once again one of the fastest-growing major economies in the world. Growth outlook has remained robust because of the domestic consumption, govt investment and relatively lower dependence on exports.”

The Reserve Bank of India (RBI) had forecast 7.2 per cent growth for the March quarter and 6.6 per cent for the full fiscal. The central bank has now projected 6.5 per cent GDP growth for FY26, citing expectations of improved private consumption and stable investment activity.

Also Read:India GDP growth at one-year high of 7.4% in Q4, FY25 expansion at 6.5%  

Private capex, rural recovery, and industry activity offer support

Ranen Banerjee, Partner and Leader, Economic Advisory at PwC India, described the 6.5 per cent GDP growth for FY25 as a “strong outcome” amid global challenges. “The manufacturing growth has printed weak and it is a matter of concern, especially given the trade-related disruptions and global economic slowdown expected in FY26,” he said, according to an ANI report.

He also highlighted an 8.8 per cent rise in Gross Fixed Capital Formation, possibly driven by private capital expenditure, as government capex remained largely flat over the previous year.

Anshuman Magazine, Chairman & CEO of CBRE India, Southeast Asia, Middle East & Africa, said the better-than-expected growth showed India’s resilience. “The growth highlights strong domestic demand, rural market recovery, and an active industrial sector. The economy’s adaptability is evident in the broad industry growth,” he said.

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He added that increased activity in the construction and financial sectors has lifted investor sentiment in the real estate space and boosted homebuyer confidence.

Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the March quarter growth partly reflects a push in public capital expenditure towards the end of the fiscal year.

She cautioned that FY26 may present challenges due to global uncertainties and softening urban income.”Capital formation remained steady, but FY26 could face challenges due to global uncertainties affecting investment sentiment and softer urban income weighing on private consumption,” she said.

Outlook cautious for FY26

While India’s FY25 growth has outpaced forecasts and reinforced its position as a global outperformer, economists remain cautious about FY26 due to persistent global headwinds and domestic demand concerns. Nonetheless, the broad-based recovery and sustained policy push remain critical buffers for the economy.

(With inputs from ANI)