India’s economy did very well, with GDP growth of 7.8% in the June quarter, the strongest rate in the last five quarters. This number was higher than the 6.5% the Reserve Bank of India (RBI) had predicted and also higher than what the market had expected. This shows that the economy is strong despite problems with tariffs and global trade. In the same quarter last year, GDP grew by 6.5%, and in the March quarter, it grew by 7.4%.
Key Highlights of India’s Q1 FY25 GDP Growth
| Indicator | June Quarter (Q1 FY25) | Previous Quarter | Year Ago (Q1 FY24) |
|---|---|---|---|
| GDP Growth | 7.8% | 7.4% | 6.5% |
| Services Growth | 9.3% (2-year high) | 8.2% | 8.0% |
| Manufacturing | 7.7% | 7.2% | 6.0% |
| Construction | 7.6% | 10.4% | 9.1% |
| Mining | -3.1% (11-quarter low) | 4.6% | 2.7% |
| Electricity | 0.5% (19-quarter low) | 5.2% | 4.7% |
| Private Consumption | 7.0% (3-quarter high) | 6.2% | 5.5% |
| Government Consumption | 7.5% | 4.2% | 5.0% |
| Investment-to-GDP Ratio | 34.6% (3-year high) | 32.5% | 32.0% |
Services Sector: The Growth Engine
The services sector was the biggest contribution, growing at the quickest rate in two years, 9.3%. During this time, government services grew by 9.8%, the largest in 12 quarters.
- Financial services expanded by 8.6%.
- Trade, hotels, transport & communication rose by 9.5%.
- Overall, services now contribute 53% of India’s GDP.
Mixed Performance Across Sectors
- Manufacturing grew 7.7%, reflecting industrial recovery.
- Construction slowed to 7.6%, from double-digit growth earlier.
- Mining fell sharply by 3.1%, the steepest drop in 11 quarters.
- Electricity generation nearly stagnated at 0.5%, a 19-quarter low.
Strong Consumption and Investment
Private consumption reached its highest level in three quarters, at 7%, thanks to demand from rural areas. Investment hit a three-year high of 34.6% of GDP, which shows that the economy is growing over the long term. Government spending also went up by 7.5%. Private consumption alone takes for 56.7% of GDP today, which shows how important it is for keeping the economy growing.
Economists’ View
- Aditi Nayar, Chief Economist, ICRA, said the growth exceeded expectations, showing India’s limited exposure to global tariff turmoil.
- Madan Sabnavis, Chief Economist, Bank of Baroda, noted that even if U.S. tariffs have a 0.2-0.4% impact, India’s growth outlook remains strong at around 6.5% for FY25.
Global Recognition
People all over the world are paying attention to the favorable growth trend. S&P Global Ratings recently raised India’s outlook after almost twenty years, saying that the country will develop at an average pace of 6.8% over the next three years.
Bottom Line
India’s GDP expanded 7.8% in the June quarter, showing that the economy can handle problems from outside. India is becoming one of the world’s largest economies with the highest rates of growth. This is because to strong manufacturing and services output, as well as robust investment and consumption.
