India's GDP Grows 7%; Rural Demand & Domestic Travel Aid Profit; Stronger Momentum In FY Second Half

India's GDP Grows 7%; Rural Demand & Domestic Travel Aid Profit; Stronger Momentum In FY Second Half

As per the ICICI Bank report, this marked a stronger growth momentum in the second half of the financial year compared to the first half. One key reason for this is the increase in rural demand, supported by strong agricultural production. For the full financial year 2025, the report pegs GDP growth at 6.3 percent. This is slightly lower than the government's current estimate of 6.5 percent.

IANSUpdated: Thursday, May 29, 2025, 11:01 AM IST
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New Delhi [India]: India's economy is estimated to have grown by 7 per cent year over year in the fourth quarter of the financial year 2025, according to a recent report by ICICI Bank.

As per the ICICI Bank report, this marked a stronger growth momentum in the second half of the financial year compared to the first half, powered by a rise in government spending and a pick-up in rural demand, domestic travel and services exports.

The report stated, "In Q4FY25, we expect GDP growth at 7 per cent, which is much higher than GVA. This should take overall GDP growth for FY25 to 6.3 per cent."

It highlighted that India's growth momentum picked up in H2, the second half of the financial year compared with the first half. One key reason for this is the increase in rural demand, supported by strong agricultural production. Construction activity has also remained steady.

Urban demand has been weak so far, though it is expected to improve gradually, especially with the potential implementation of the new Pay Commission.

In terms of numbers, the report estimates Gross Value Added (GVA) growth for Q4FY25 at 6.4 per cent, while GDP growth is seen higher at 7 per cent.

The difference between GVA and GDP is due to higher net taxes. A similar pattern was observed in Q4 last year, where GVA growth stood at 7.3 per cent, while GDP growth was significantly higher at 8.4 per cent.

For the full financial year 2025, the report pegs GDP growth at 6.3 per cent. This is slightly lower than the government's current estimate of 6.5 per cent in the Second Advance Estimates (SAE).

The report noted that the trend of lower subsidies, especially due to reduced energy prices, is likely to continue into FY26 and support economic growth.

The bank also said that the main drivers of growth are unlikely to change in the near future, with rural areas expected to perform better again, helped by an above-normal monsoon. Continued government spending is also expected to boost growth further.

However, exports remain a concern. While India's goods exports to the United States rose 27 per cent year-on-year in April, this pace is unlikely to be sustained in the coming months. Still, lower oil prices are expected to be a positive factor.

India's Provisional Gross Domestic Product (GDP) for the fourth quarter and Financial Year (FY25) are likely to be released with a few days.

Disclaimer: This story is from the syndicated feed. Nothing has been changed except the headline.

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