India’s economy increased 7.4% between January and March, compared to 6.2% in the previous quarter and considerably beating analysts’ expectations.
However, the growth of 2024-25 years, which takes place between April and March, is set at 6.5% – the slowest in four years.
The Central Bank of the country – The Reserve Bank of India – meets later in June and is expected to reduce rates for the third consecutive time to increase growth.
India remains the major economy for the fastest growth in the world, although growth has dropped sharply from the 9.2% summit recorded during the 2023-24 fiscal year.
Asia’s third economy benefited from a strong agricultural activity, stable public spending and improving rural demand during the last financial year, even if manufacturing and new investments by private companies have remained low.
Although rural growth has improved due to a strong winter harvest, it is not enough to compensate for the continuous weakness of urban consumption, which reported due to high unemployment and a drop in wages.
India’s growth engine remains strongly dependent on government infrastructure expenses on roads, ports and highways, in the absence of significant improvement in private investment.
In the future, internal growth should benefit from the government’s income tax reductions announced in the federal budget, as well as “monetary relaxation, the expectations of a monsoon greater than the monsoon and lower food inflation,” said Aditi Nayar, economist of the ICRA rating agency.
But the current uncertainties underway, including the trade war of US President Donald Trump, should weigh on the demand for export.
India is currently negotiating a commercial agent with the United States, which is expected to end in the fall. Trump slapped prices up to 27% on Indian products in April – and a 90 -day break at these ends on July 9.
Economists expect GDP growth during the year 2025-2026 to 6% to 6% on the back of these world slowdown concerns, which could delay new private capital expenses in projects.
The International Monetary Fund (IMF) expects global growth to decrease to 2.8% in 2025 and 3% in 2026.
ICRA data showed earlier than private sector expenses, in the context of overall investments in the economy of India, dropped to a lower 33% in the last financial year.
Direct foreign net investment (IDE) in India – at $ 0.35 billion in 2024-25 – also dropped to the lowest level in two decades, increasing foreign external investments and repatriations of Indian companies, neutralized in domestic investments.
The government of Prime Minister Narendra modified attempted to position India as a manufacturing center for global companies.
While companies like Apple recently indicated that it was deploying Manufacturing investment could still stallThe United States and China accepting prices backwards earlier this month.
