India’s Economy Set to Grow Steadily Through FY25-26 - News

India’s economy is expected to expand by 6.8 to 7 percent in the fourth quarter of FY25, with large contributions from the agriculture sector, according to a recent report by Bank of Baroda. For the entire fiscal year, GDP growth is projected at 6.2 to 6.4 percent, reflecting strong macroeconomic fundamentals compared to other global nations.

The agriculture sector is forecasted to grow by 7.7 percent in Q4 FY25, a significant increase from 0.9 percent in the same quarter last year. This growth is attributed to record foodgrain production across kharif and rabi crops.

Growth across other sectors remains uneven. While mining is expected to grow by 1.5 percent, manufacturing could decrease significantly to 1.8 percent because of a high base and lower corporate profits. The electricity sector may also come down to 5.5 percent from 8.8 percent the year before.

Construction, however, is expected to stay strong, supported by higher output in steel and cement as well as steady government capital spending. Hospitality and transport are expected to benefit from seasonal events, with the trade, hotels, and transport sectors likely to grow by 6.4 percent. In contrast, financial services are likely to slow to 6.6 percent due to a decline in credit growth.

Looking ahead to FY26, GDP is projected to grow by 6.4 to 6.6 percent, supported by consistent domestic demand, monetary easing, and favorable monsoon forecasts. However, the report points out that global tariffs or geopolitical tensions could potentially disrupt growth.