India's gross domestic product (GDP) growth for the fourth quarter of FY2024–25 is projected at 6.9%, according to leading credit rating agency ICRA. While this indicates a modest rebound from Q3’s 6.2% growth, it falls significantly short of the 7.6% expansion implied by the National Statistical Office’s (NSO) full-year forecast of 6.5%. ICRA now expects GDP for FY25 to grow by 6.3%—below the government’s estimate—citing weak private consumption, uneven investment activity, and a divergence in export performance. The NSO is set to release its official provisional GDP figures on May 31, a critical moment for policymakers and markets alike.
Economic Outlook Tempered by Lower-than-Expected Q4 Momentum
ICRA Ltd., one of India's leading credit rating agencies, has revised its GDP growth estimate for the final quarter of fiscal year 2024–25 to 6.9%. While the figure signals a marginal improvement over the previous quarter’s 6.2%, it underdelivers compared to the 7.6% growth needed to meet the NSO’s full-year forecast of 6.5%.
This downward revision casts a shadow over expectations built earlier in the year when government forecasts were buoyed by resilient domestic demand, stable inflation, and global macroeconomic tailwinds.
FY25 GDP Forecast Cut to 6.3%, Below Government Target
ICRA now anticipates that India’s full-year GDP growth for FY2024–25 will settle at 6.3%, marking a notable decline from the previous year’s 9.2% expansion. The updated forecast reflects lingering economic headwinds, including sluggish private consumption and inconsistent capital formation, which continue to weigh on India’s post-pandemic recovery trajectory.
In February, the NSO projected 6.5% GDP growth for FY25. To meet that target, the economy would have needed to grow by 7.6% in the final quarter—a benchmark that ICRA’s analysts consider increasingly unattainable without major upward revisions to data from Q1 to Q3.
Mixed Signals from Consumption, Investment, and Exports
According to ICRA Chief Economist Aditi Nayar, consumption patterns in Q4 FY25 remained erratic, and investment activity failed to display the sustained upward momentum needed to support robust growth. Uncertainty over tariffs and regulatory measures contributed to the subdued capital expenditure by both private and public sectors during the period.
On the external front, the performance of India’s exports showed divergence. Services exports remained resilient, registering double-digit year-on-year growth, bolstered by continued global demand for IT and digital services. Conversely, merchandise exports shrank during the quarter, reversing the modest gains recorded in the December 2024 quarter.
Implications for Policy and Economic Planning
The discrepancy between ICRA’s projections and the NSO’s optimistic outlook may influence upcoming fiscal and monetary policy decisions. Should the NSO’s data align more closely with ICRA’s outlook, policymakers may consider calibrated stimulus to spur consumption and revive investment sentiment—particularly ahead of the budget cycle and with general elections on the horizon.
The Reserve Bank of India (RBI) may also adopt a cautious stance on interest rate adjustments, especially if growth proves slower than anticipated and inflation remains within tolerable bands.
Anticipation Builds Ahead of Official GDP Data
The NSO is scheduled to release its provisional GDP estimates for FY25, along with fourth-quarter figures, on May 31. These numbers will be closely watched by economists, investors, and policymakers alike, as they will not only validate or refute independent forecasts like ICRA’s but also set the tone for strategic planning in FY2025–26.
The extent to which revisions are made to prior quarters could materially alter the narrative. Until then, the forecast gap underscores the need for cautious optimism and underscores the complexity of India’s economic recovery in an uneven global environment.
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