India’s economy grew by a stronger-than-expected 7.4% in the quarter ending March 2025, signaling a robust rebound from last year’s slowdown and giving Prime Minister Narendra Modi’s government a timely boost ahead of key fiscal decisions, Financial Times reports.
Driven by solid performance in construction and manufacturing, along with a surge in tax receipts, the growth figure outpaced the 6.7% median estimate from a Reuters economist poll and marked an improvement from the revised 6.4% expansion in the previous quarter.
The upbeat economic data offer renewed momentum to Modi, who has been under political pressure to revitalize growth following a period of tepid consumption and household financial strain. To counteract the downturn, his administration introduced middle-class tax cuts, aiming to boost spending amid stagnant wages and rising debt burdens.
Despite the quarterly jump, India’s overall GDP growth for the financial year ending March dipped to 6.5%, down from 9.2% in the previous year, according to provisional estimates. This underlines the broader structural challenges facing Asia’s third-largest economy.
Economists, including Madhavi Arora of Emkay Global, suggest that India may have settled into a “new normal” growth range of 6–6.5%, unless deeper structural reforms are implemented. “If we’re around that number at a time when there’s going to be a global slowdown, it’s a decent number,” Arora told the Financial Times. “If we want more, we need to really pull up our socks.”
Modi has set an ambitious goal of transforming India into a developed economy by 2047, coinciding with the centenary of its independence. Many analysts say this would require sustained annual growth of at least 8%, a level not yet consistently achieved.
Still, India remains the world’s fastest-growing major economy, and the International Monetary Fund (IMF) projects that the country’s economic output could soon rival Japan’s, reaching $4.2 trillion in 2025.
The strong growth figures come days ahead of a key Reserve Bank of India (RBI) policy meeting. Analysts expect the central bank to cut interest rates for a third consecutive time, capitalizing on eased inflationary pressures and a favorable macroeconomic environment.
“Consumption is likely to have held up relatively well on the back of falling inflation,” said Joe Maher, assistant economist at Capital Economics, in comments shared with the Financial Times. “Growth may remain strong over the coming quarters as lower interest rates filter through into the economy and Indian exporters benefit from punitive US tariffs on China.”
India is also seen as relatively better positioned than regional rivals in terms of U.S. trade dynamics, thanks to lower tariff exposure under Donald Trump’s administration, adding another tailwind for Indian exporters navigating global uncertainties.
As the government and central bank weigh next steps, today’s data reinforce India’s resilience — but also underscore the structural gaps it must close to sustain long-term prosperity and achieve Modi’s 2047 vision.
