The Indian economy extends by 6.5 % in the 25th fiscal year, rural demand, and services pay the fourth quarter

The Indian economy recorded a strong performance in the fiscal year 2024-25 (fiscal year 25), where it recorded a real growth in the GDP by 6.5 %, driven by strong domestic demand, flexible rural consumption, and prosperous services activity, according to the monthly economic review of the Ministry of Finance for the month of May 2025.

The momentum was particularly captured in the quarter of January (Q4 FY25), with growth acceleration to 7.4 % on an annual basis, and it is largely nourished by 10.8 % in construction activity and 7.3 % in services. Sectors such as real estate, hospitality and information technology have contributed significantly to the growth of services, which confirms the structural flexibility of the economy despite the global opposite winds.

It also supported agriculture and economic animals, and benefited from the favorable harvest season and government interventions aimed at stabilizing food supplies and prices.

On the inflation front, the report highlighted the welcoming of the consumers. Retail enlargement decreased to 2.8 % in May 2025, the lowest level since February 2019, with food enlargement decreased to less than 1 %. Moderation is attributed to health crops and effective policy measures, including strategic publications of food stocks.

In response to the pressure of the inflation that reduces, the RBI Reduction of the Ribo rate by 50 basis points in June, which led to a decrease to 5.5 %, and a cumulative mark of 100 basis points since February 2025.

Externally, trade performance in India showed signs of recovery. The country’s total exports, which combine goods and services, increased by 2.8 % on an annual basis in May, reaching 71.1 billion dollars. Meanwhile, the trade deficit was sharply narrowed to $ 6.6 billion, a decrease of $ 10.5 billion in April, with the support of low crude oil prices, which decreased to about $ 67 a barrel after the geopolitical dilution in West Asia.

Foreign currency reserves remained strong, amounting to $ 699 billion, which is enough to cover about 11.5 months of imports – a major indication of the stability of the external sector.

On the recruitment front, the official character continued to have jobs, as EPFO ​​for 19.1 net additions in April 2025. However, the total workforce participation rate reached 54.8 %, with unemployment rates to 5.6 % amid global economic uncertainty.

With India moving to the 26th fiscal year, economists remain optimistic with caution. The report emphasized that maintaining growth momentum depends on maintaining local consumption, enhancing investment, and moving in potential global risks.