New Delhi: India’s GDP growth is likely to accelerate to 6.9% year-on-year (YoY) in Q4 FY2025, up from 6.2% in Q3, according to the latest estimates by credit rating agency ICRA. However, the agency also projects a sharp slowdown in overall economic expansion for FY2025, highlighting an uneven recovery led by external uncertainty, muted industrial momentum, and mixed investment signals.
While ICRA’s projection for Q4 GDP growth is a slight improvement, it remains well below the National Statistical Office’s (NSO) estimate of 7.6% for the same quarter. The Gross Value Added (GVA) is expected to rise modestly to 6.3% in Q4 FY25, from 6.2% in Q3, indicating a flat performance in agriculture and services and only a mild uptick in industrial growth.
“Private consumption and investment trends remained uneven in Q4, partly due to global tariff uncertainty,” said Aditi Nayar, Chief Economist, ICRA. “While rabi crop output supported agri-GVA, sluggish industrial growth and weak signals from the services sector weighed on overall GVA momentum.”
Full-Year Growth Slows Significantly
Unless Q1–Q3 data is materially revised, ICRA expects India’s full-year GDP to grow at 6.3% in FY2025, down sharply from 9.2% in FY2024. Similarly, GVA is forecast at 6.2%, compared to 8.6% last year. These are below the NSO’s Second Advance Estimates of 6.5% for GDP and 6.4% for GVA.
The deceleration is primarily driven by a slowdown in industrial growth, estimated at 5.3% in FY2025, compared to a strong 10.8% last year. The services sector, too, is expected to cool to 7.2%, from 9.0%.
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Industrial and Services Sector Performance
Industrial GVA growth in Q4 is expected to improve slightly to 4.8%, led by construction (+7.5%), electricity (+5.5%), and mining (+3.5%), while manufacturing remains stagnant at +3.5%. Investment indicators presented a mixed picture. Project announcements surged to a record ₹19.2 trillion, yet project completions remained weak at ₹1.6 trillion, down 59% YoY.
In services, GVA is estimated to rise to 7.5% in Q4, marginally higher than 7.4% in Q3. However, 9 of 13 high-frequency indicators—including fuel consumption, air cargo, and telecom subscribers—witnessed slower YoY growth. Notably, services exports remained a bright spot, growing 14.1% YoY and touching $102 billion, the highest ever in a Q4.
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Agriculture Holds Steady, Consumer Sentiment Improves
Agricultural GVA is projected at 5.5% in Q4, supported by strong rabi crop output, although it’s below the NSO’s estimate of 6.2%. Rural sentiment, as measured by the RBI’s Consumer Confidence Survey, showed improvement with the Current Situation Index (CSI) for rural consumers rising to 100.1 in March, indicating optimism. Urban sentiments also improved but remained in negative territory.
Outlook
Despite a modest recovery in Q4, the full-year outlook paints a picture of moderating momentum, with global headwinds, slowing investments, and services fatigue playing spoilsport. As the Indian economy moves into FY2026, much will depend on domestic policy support, monsoon performance, and global trade stability.
