India beats forecasts with 7.4% growth in January-March

NEW DELHI: India’s economy grew 7.4% in the January-March quarter from a year earlier, much faster than forecasts and driven by the construction and manufacturing sectors, data showed on Friday.

Gross domestic product in Asia’s third-largest economy was above the 6.7% growth projected by analysts in a Reuters poll, and was up from revised growth of 6.4% in the previous quarter. It was the fastest expansion since the January-March 2024.

India’s growth was helped by a cut in government subsidy payouts in January-March, the final quarter of the fiscal year, and a surge in tax collections.

The gross value added (GVA), seen as a more accurate measure of underlying economic activity, grew 6.8% in the first three months of 2025, compared to a revised expansion of 6.5% in the previous quarter. GVA strips out indirect taxes and government subsidy payouts, which tend to be volatile.

Growth for the fiscal year was estimated at 6.5%, the highest among the world’s large economies.

Private consumer spending, which accounts for 57% of Indian GDP, rose 6% year-on-year in January-March, down from a revised 8.1% in the previous quarter, as rural demand for durables and farm equipment like tractors improved, while urban spending remained subdued.

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Retail inflation, which eased to a near six-year low of 3.16% in April, alongside a favourable monsoon forecast, is expected to keep food prices in check and pave the way for the Reserve Bank of India to cut its policy repo rate again next month.

Government spending fell 1.8% in the three months through March compared to a revised expansion of 9.3% in the previous quarter, the data showed.

Capital spending rose 9.4% in the quarter though some private firms delayed investment amid global uncertainties such as U.S. President Donald Trump’s trade tariffs.