India’s economic growth is becoming more balanced, driven by higher private consumption, according to a recent Crisil report. The share of private consumption in GDP has increased in fiscal 2025, indicating a shift towards more sustainable growth patterns.
GDP Growth Revised to 6.5% for Fiscal 2025
The second advanced estimate places India’s real GDP growth at 6.5% for fiscal 2025, a mild revision of 10 basis points (bps) from earlier projections. This revision brings the expected growth closer to the pre-pandemic decade average of 6.6%.
Chief Economist at Crisil, Dharmakirti Joshi, highlighted that this comes after a significant upward revision of 100 bps in the previous year’s growth, which stood at 9.2%.
“We expect GDP growth to remain at 6.5% next fiscal, supported by normal monsoons, lower food inflation, and potential rate cuts of 75-100 basis points in the current cycle that started earlier this month,” Joshi added.
Investment Trends and Corporate Caution
The report indicates that public and household investments were the fastest-growing components of investment in fiscal 2024. However, corporate investments remain sluggish despite financial flexibility and low leverage enjoyed by firms.
Key concerns affecting corporate investment include:
- Ongoing global tariff wars
- Fear of dumping from China
- Uncertainty regarding trade policies
“The complexity of risks arising from tariff actions – both implemented and anticipated – adds downward pressure on our forecasts,” noted Joshi.
Quarterly Growth Trends and Fiscal Outlook
India’s GDP growth accelerated to 6.2% in the third quarter (October-December) of 2024-25, an improvement from the revised 5.6% growth recorded in the second quarter.
For the full financial year 2024-25, the GDP growth is now estimated at 6.5%, while the economic growth for 2023-24 has been revised to 8.2%, marking a 12-year high.
Meanwhile, the fiscal deficit for the first 10 months (April-January) of the financial year stood at ₹11.70 lakh crore, accounting for 74.5% of annual estimates.
India’s economic growth trajectory appears stable, with private consumption playing a larger role in driving GDP expansion. While public and household investments remain robust, corporate investment growth is hindered by global trade uncertainties and tariff-related risks. Looking ahead, rate cuts, normal monsoons, and lower food inflation are expected to support steady growth at 6.5% in the next fiscal year.
