Q4fy25 Gdp Growth Does A Rescue Act

The India Q4FY25 Real GDP growth announced on the last day of May 2025, came in much better than expected at 7.4% yoy. This is sharply better than the previous 3 quarters of FY25; which recorded 6.5%, 5.6% and 6.4% respectively. The 7.4% GDP growth in Q4 allowed full year GDP growth to scale 6.5%; 15-20 bps higher than estimates. The good news in fourth quarter was the strong performance of agriculture sector, construction, defence, and financial services.

What We Read From The Nominal GDP Break-up?

There were 2 key takeaways from the nominal GDP data. Firstly, nominal GDP growth (before adjusting for inflation) was robust at 9.8% in FY25, compared to 12.0% in FY24. This goes to show that overall economic activity expanded at a rapid clip, despite a much higher base and the global macro tumult. That kept fiscal deficit under 4.8% of GDP.

The second takeaway is; farm output has shown a sharp bounce in FY25, with nominal growth in agricultural GDP at 10.4%, compared to 9.6% in FY24. The services sector is flat to lower in FY25, while manufacturing is where the pressure is visible. The FY25 slowing in manufacturing, electricity, and mining was due to policy delays and tepid capex.

Why Nominal Data Matters More To The GDP Narrative?

In the table above, we have deliberately looked at the nominal data, instead of real GDP data, as that gives a better picture of economic activity. Here are some inferences.

• The nominal GDP for FY25 full year crossed ₹330 trillion, which is higher than expected. This is not only indicative of output, trade, and jobs being robust; but also shows that India has managed the global weakness much better.

• Manufacturing and electricity are the two components of secondary sector growth, that showed intense pressure in FY25. While manufacturing was about uncertainty and tepid capex; power is at full capacity and fresh capacities will take time.

• In the primary sector, even as mining and quarrying have been under pressure due to policy issues, farm output has improved. That is largely due to better MSP, improved supply chain investments, and a much more robust Kharif and Rabi output last year.

• If we compare the services space in FY25 and FY24, most segments are almost at par. Defence and public services got a fillip in the fourth quarter. The big positive surprise was construction, which stayed robust even in tumultuous times.

The message from the GDP numbers is that an inward-looking growth model has allowed India to be the fastest growing large economy for the fourth year in a row.