India’s economy ended fiscal year 2025 on a strong note, growing 7.4 percent in the last quarter, driven by a construction boom and increased government spending. Infrastructure projects and public administration fueled this growth, while manufacturing remained modest. This quarterly surge helped offset slower growth earlier in the year, showcasing the economy’s underlying strength.
Despite the robust quarter, annual growth slowed to 6.5 percent, the lowest in four years. This deceleration reflects ongoing global uncertainties and cautious consumer spending, particularly in urban areas. Rural demand improved thanks to a good agricultural season, but overall consumption remained uneven across the country, highlighting the mixed nature of the recovery.
Looking ahead, the Reserve Bank of India maintains a steady growth forecast of 6.5 percent for fiscal year 2026, describing the outlook as balanced amid external pressures. However, some analysts remain cautious, pointing to rising downside risks due to geopolitical tensions and trade uncertainties. High-frequency data suggests continued resilience in key sectors, offering some optimism.
Experts agree that India is well-positioned to remain the fastest-growing major economy despite challenges. While global headwinds and regional conflicts pose risks, the country’s strong infrastructure investment and improving consumption patterns provide a solid foundation for sustained growth in the coming year.
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