India’s GDP growth slowed to 6.5% in the financial year 2024–25, making it the slowest pace of annual growth since the COVID-19 pandemic year of 2020–21, according to provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday, May 30, 2025.

While the fourth quarter (Q4) of FY25 saw a significant acceleration, with GDP rising 7.4% year-on-year, this quarterly uptick was not enough to offset the broader slowdown. GDP growth in the same quarter of FY24 had been 8.4%, indicating a year-on-year deceleration.

Quarterly growth dynamics

India’s quarterly real GDP growth in FY25 was as follows:

• Q1: 7.1%

• Q2: 7.2%

• Q3: 6.4%

• Q4: 7.4%

The Q4 growth of 7.4% was the fastest in the year, but lower than the 8.4% in Q4 FY24. This suggests that economic momentum was stronger towards the end of the year, but still unable to match the previous year’s performance.

Government’s perspective on the slowdown

Chief Economic Advisor V. Anantha Nageswaran, during a post-release press briefing, sought to downplay the significance of the slowdown. He emphasised that India's performance in a “growth-scarce” global environment was notable.

“India’s growth rate differential with advanced economies is higher post-COVID than it was during the 2003–2010 boom period,” he said.
“Despite global uncertainties, political conflicts and trade tensions, India is holding up better than many advanced economies.”

Sector-wise performance

Agriculture sector

The ‘Agriculture, Livestock, Forestry & Fishing’ sector was one of the bright spots in FY25. It grew 5.4% in Q4, a significant improvement from 0.9% in Q4 FY24. For the full year, the sector grew 4.6%, up from 2.7% in the previous year.

This surge was attributed to favourable climatic conditions, better irrigation coverage, and rising productivity in livestock and horticulture.

Manufacturing sector

Manufacturing posted 4.8% growth in Q4, up from 3.2% in Q3. However, this was on a high base of 11.3% growth in Q4 FY24, leading to a full-year growth of only 4.5%, down from 12.3% in the previous year.

The slowdown was primarily due to muted export demand, inventory corrections, and rising input costs in the first half of the year.

Construction sector

The construction sector posted a strong rebound with 10.8% growth in Q4, the fastest of any sector this quarter. This was up from 8.7% in Q4 FY24. For the full year, construction grew 9.4%, slightly lower than 10.4% in FY24.

The sector benefitted from strong government capital expenditure, especially on infrastructure projects, and continued momentum in real estate and housing.

Tertiary sector (services)

The tertiary sector, which includes trade, hotels, transport, financial services and public administration, grew 7.3% in Q4, broadly in line with Q2 (7.2%) and Q3 (7.4%). However, this was slower than the 7.8% in Q4 FY24.

For the full year, the services sector grew 7.2%, a drop from 9% in FY24. The deceleration was attributed to moderating consumer demand in urban areas and softening of global IT service exports.

Understanding the broader picture

Despite the slower headline growth, India remains one of the fastest-growing major economies in the world. However, experts caution against reading too much into quarterly fluctuations and urge a focus on long-term structural reforms.

Some of the key concerns highlighted by economists include:

• Unemployment and underemployment, particularly in rural areas

• Stagnant private consumption, which continues to drag domestic demand

• Slower private investment, especially in manufacturing and MSMEs

• External risks from geopolitical instability and volatile oil prices

Why the slowdown matters

The 6.5% growth figure, while respectable by global standards, marks a decline from the post-COVID recovery highs. In FY24, the Indian economy grew 7.8%, boosted by base effects and pent-up demand. The slowing trend suggests that the recovery phase may be tapering off, and India is now entering a more stable but slower growth path.

Looking ahead

The outlook for FY26 will depend on multiple factors:

• Monsoon performance, which will impact agriculture and rural incomes

• Global economic conditions, including demand from the U.S. and Europe

• Interest rate trends, both domestically and globally

• Policy support from the government in the form of public investment and structural reforms

As India heads into an election year, with increasing emphasis on job creation, manufacturing push (via Make in India) and investment in human capital, the focus is likely to remain on sustaining 7%+ growth in a non-inflationary, inclusive manner

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