India's growth remains intact despite global gloom: CEA backs resilient demand, rising consumption

Despite a marked slowdown in full-year economic growth, India’s Chief Economic Advisor ( CEA) V. Anantha Nageswaran remains confident in the country’s growth trajectory, underlining its resilience in the face of mounting global uncertainties. “It’s not just the growth number but how India’s growth is holding up in a difficult global environment that matters,” he stated following the release of the Q4 and FY25 GDP data.

India’s GDP growth for FY25 slowed to 6.5%, a four-year low compared to the post-pandemic high of 9.2% in FY24. Yet, Q4 growth surged to 7.4%, exceeding expectations and signaling robust economic momentum driven by strong industrial output and resilient consumption, particularly in rural areas. This quarterly performance helped the economy maintain its status as the fastest-growing major economy globally.

“We are retaining our FY26 growth forecast at 6.3–6.8%,” said Nageswaran, highlighting steady capital goods imports, a rise in infrastructure output, and stable gross FDI inflows as signs of a healthy investment climate. He noted that while global growth is expected to slow, India has seen “smaller forecast cuts” relative to peers.

Private consumption, now at its highest share of GDP since FY04, rose 7.2% year-on-year, buoyed by rural demand and urban income-tax relief. The services sector and exports also continued to show resilience amid global trade tensions and escalating geopolitical risks. Agricultural output provided a surprise upside, with FY25 growth at 4.6%, more than double the previous year.

“Urban unemployment is coming down, and both urban and rural demand remain steady,” the CEA added, pointing to signs of a benign growth-inflation environment that could support future rate easing. The external sector, he said, is benefiting from strong services exports and steady merchandise performance.

Acknowledging volatile foreign portfolio investment (FPI) trends, Nageswaran emphasised the need to boost FDI inflows further in light of shifting global supply chains. “We must redouble efforts to attract FDI. Globally, we are in a growth-scarce environment,” he cautioned.

While private investment remains cautious due to global uncertainties, the CEA affirmed that India’s domestic demand-driven economy continues to provide a strong foundation for growth. With supportive macroeconomic conditions and sustained consumption momentum, India remains well-positioned to navigate global turbulence.