New Delhi – India’s GDP growth is projected to rise to 6.9% in the fourth quarter of FY2025, up from 6.2% in the previous quarter, despite heightened global uncertainties stemming from U.S. tariff-related disruptions, according to a report by ICRA released on Monday.
The report also noted an improvement in consumer sentiment across both rural and urban regions.
“In a quarter marked by increased global volatility, ICRA estimates India’s GDP growth to have accelerated to 6.9% in Q4 FY2025 from 6.2% in Q3,” said Aditi Nayar, Chief Economist at ICRA. “Private consumption and investment activity showed mixed trends in the quarter, with investment partly impacted by uncertainty surrounding tariffs.”
Nayar added that the strong output from most rabi crops likely supported agricultural GVA growth in Q4. However, sluggish industrial output and weak performance across several service sector indicators may have weighed down GVA growth in these segments.
Based on available data for central government indirect taxes and subsidies, ICRA estimates a significant increase in net indirect tax growth during Q4—up sharply from 6.8% in Q3—driven by a notable 33% contraction in the Centre’s subsidy disbursements, compared to a 31.1% increase in the previous quarter.
Despite trade uncertainties linked to U.S. tariffs, India’s investment activity showed a mixed picture. Year-on-year performance for six out of 11 high-frequency investment indicators improved in Q4 compared to Q3, especially in construction-related sectors, including infrastructure goods output, cement production, and finished steel consumption.
Investor summits in Madhya Pradesh, Kerala, Karnataka, and West Bengal helped push project announcements to a record ₹19.2 lakh crore in Q4 FY2025, up from ₹16.1 lakh crore in Q4 FY2024.
The Centre’s capital expenditure in Q4, as outlined in the revised budget estimates, indicates a healthy 21% year-on-year increase for the quarter.
While the year-on-year growth in services exports slowed to 14.1% in Q4 from 17.9% in Q3, it remained in double digits for the third straight quarter. Notably, services exports reached $102 billion in Q4 FY2025—the highest level recorded for any fourth quarter of a fiscal year, the report highlighted.
Rural consumer sentiment showed modest improvement in January 2025, as indicated by the Current Situation Index (CSI), likely supported by cash flows from the kharif harvest and favorable rabi sowing trends.
Urban sentiment also saw a boost. According to the RBI’s Urban Consumer Confidence Survey conducted across 19 major cities, the CSI rose to 95.5 in March 2025 from 93.7 in January, reflecting growing optimism among urban consumers.
With inputs from IANS
