New Delhi, May 19 India’s GDP growth is expected to increase to 6.9 per cent in Q4 FY2025 from 6.2 per cent in Q3 FY2025 despite the enhanced global uncertainty due to the US tariff turmoil during the quarter, according to an ICRA report released on Monday.
The report also highlights an increase in consumer sentiment in both the rural and urban areas.
ICRA chief economist Aditi Nayar said, “In a quarter characterised by enhanced uncertainty on the global front, ICRA estimates India’s GDP growth to have risen to 6.9 per cent in Q4 FY2025 from 6.2 per cent in Q3 FY2025. Both private consumption and trends for investment activity were uneven in Q4 FY2025, with the latter partly owing to tariff-related uncertainty.”
While the robust increase in the output of most rabi crops is likely to have boosted the agri-GVA growth in Q4 FY2025, the tepid pace of expansion in the industrial volume growth as well as the deterioration in the performance of several service-sector indicators is expected to have weighed on the GVA growth of these segments,” she added.
Based on the available data for the Centre’s indirect taxes and subsidies, ICRA estimates that the growth in net indirect taxes rose quite sharply in the quarter from 6.8 per cent in Q3 FY2025, aided by a sharp contraction in the Centre’s subsidy disbursement (-33 per cent in Q4 FY2025 vs. +31.1 per cent in Q3 FY2025.
Against the backdrop of trade-related uncertainty triggered by the US tariffs, India’s investment activity showcased a mixed trend in Q4 FY2025. The year-on-year performance of six of the 11 investment-related high-frequency indicators improved in Q4 over Q3, mostly pertaining to the construction sector, including infrastructure/construction goods’ output, cement production, and finished steel consumption.
Additionally, state-investor meets in Madhya Pradesh, Kerala, Karnataka, and West Bengal pushed up project announcements to record levels of Rs 19.2 lakh crore in Q4 FY2025 (vs Rs 16.1 lakh crore in Q4 FY2024).
The Centre’s capex in Q4 FY2025 reflected in the revised budget estimate, would imply a healthy YoY growth of around 21 per cent during the quarter.
While the pace of YoY expansion of services exports slowed to 14.1 per cent in Q4 FY2025 from 17.9 per cent in Q3 FY2025, it continued to print in double digits for the third consecutive quarter. Notably, services exports stood at $102.0 billion in Q4 FY2025, the highest level seen in the Q4 of any fiscal, the report points out.
Rural sentiments, as reflected in the Current Situation Index (CSI), improved somewhat in January 2025, likely aided by cash flows from the kharif harvest and favourable trends in rabi sowing and output.
Interestingly, the March 2025 round of the RBI’s Urban Consumer Confidence Survey, which is conducted in 19 major cities, revealed that urban consumer sentiments improved further, with the CSI rising to 95.5 from 93.7 in January 2025, the report added.
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