FY25 GDP growth a tale of two halves as economy withstands global shocks

Given benign inflation outlook and growth still lower than potential, MPC should continue on reducing policy rate by another 50 bps

India’s growth momentum surprised positively with a strong rebound in March at 7.4 per cent, which is fastest pace of expansion in the last four quarters. Growth was driven by investment spending led by government. Imports too were soft explained by softer oil prices. From the supply side, growth is driven by agriculture which has been buoyant after last year’s monsoon. Construction spending has been resilient not only in the quarter but over the last three years led by a real estate upcycle. On the other hand, private consumption demand was relatively muted at 6 per cent in the quarter