ISLAMABAD: India’s economy is expected to have picked up speed in the first quarter of 2025, driven mainly by stronger rural demand and increased government expenditure.
According to recent forecasts, India’s gross domestic product (GDP) likely expanded by 6.7% year-on-year between January and March, up from 6.2% in the previous quarter, signaling resilience despite global economic uncertainties.
Drivers of Growth: Rural Consumption and State Spending
The improved economic performance in the March quarter is largely attributed to robust consumption in rural areas, which helped offset weaker urban demand indicators. Government spending also played a key role in supporting investment activities, providing a vital cushion amid delayed private sector investments.
Economists highlight that while some growth estimates might be influenced by fluctuations in government subsidies and indirect taxes, the overall economic momentum remains strong.
India’s Position Amid Global Uncertainty
Despite escalating global trade tensions and economic slowdown in other major markets, India appears relatively insulated.
This resilience is credited to the country’s lower reliance on goods trade, recent tax cuts, and a favourable interest rate environment.
The Reserve Bank of India (RBI) expects GDP growth to reach 6.5% for the fiscal year starting April 2025. Inflation remains subdued at around 3.16%, aiding the central bank’s stance toward potentially lowering interest rates further.
Experts believe the coordinated policy efforts between the government and RBI demonstrate a clear commitment to sustaining growth amid external challenges.
India’s economic size is projected to match Japan’s this year, making it one of the fastest-growing major economies globally.
Analysts remain cautiously optimistic, noting that continued fiscal support and favourable weather conditions could sustain the growth trajectory in the coming quarters.
