India's domestic growth looks steady, but external risks are a key concern

Nonetheless, higher agricultural output and lower food inflation will allow the Monetary Policy Committee (MPC) to ease policy

The national accounts data, released last week, surprised most economists positively. Gross domestic product (GDP) in the fourth quarter of 2004-25 grew 7.4 per cent, taking the full-year growth rate in real terms to 6.5 per cent, as was projected by the National Statistics Office in its second advance estimates. A sharp drop in the second-quarter growth rate to a sub-6 per cent level had raised concern.  However, the economy recovered in the second half of the year, particularly in the last quarter. Growth in gross value added, at 6.8 per cent during the quarter, was driven by sectors like