What’s Driving India’s Economic Growth? Insights into 2024-25 Projections

Economic Growth Forecast for India

New Delhi: Barclays has projected that India's economy will grow by 7.2% in the fourth quarter of the fiscal year 2024-25, driven by advancements in the agricultural sector and a notable rise in net indirect tax revenues.

Aastha Gudwani, the Chief Economist for Barclays in India, stated, "We anticipate that the growth in the agricultural sector will improve year-on-year, as indicated by preliminary crop production estimates showing record wheat yields. We forecast a 5.8% growth in agricultural GVA for Q4, up from 5.6% in Q3."

Union Agriculture Minister Shivraj Singh Chouhan revealed on Monday that foodgrain production in India has surged by over 1.06 million tonnes, reaching 1,663.91 lakh tonnes for 2024-25, marking a 6.83% increase compared to the previous year.

He noted, "The rabi crop production rose from 1,600.06 lakh tonnes in 2023-24 to 1,645.27 lakh tonnes this year."

Barclays anticipates a GDP growth of 7.2% for the fourth quarter, attributing this to a significant increase in net indirect tax and a projected real GDP growth of 6.4% for the entire financial year.

The rise in indirect tax collections indicates robust economic activity within the manufacturing and services sectors.

Earlier this month, Moody’s Ratings estimated India's GDP growth at 6.3% for 2025, predicting a momentum increase to 6.5% in 2026.

This forecast aligns with the IMF's outlook, which identifies India as the only major economy expected to exceed a 6% growth rate in 2025.

These estimates are slightly lower than the National Statistical Office's second official estimate of 6.5% for FY25, which includes an implicit forecast of 7.6% for the fourth quarter.

Economists project that the economy grew between 6.4% and 7.2% from January to March 2025, with expectations of a 6.3% to 6.4% expansion for FY25.

ICRA has estimated a year-on-year GDP growth of 6.9% for the fourth quarter of FY2025, with an overall GDP growth of 6.3% for the year. Aditi Nayar, Chief Economist and Head of Research & Outreach, noted, "Private consumption and investment activity trends were inconsistent in Q4 FY2025, partly due to tariff-related uncertainties. While services sector exports maintained double-digit growth, merchandise exports saw a year-on-year contraction in Q4 after expanding in the previous quarter."

The government is set to release data for Q4 and the full FY25 on May 30.