ThePrint Macrosutra: What do GDP numbers say about the Indian economy?
Jun 6, 2025
Economist Radhika Pandey discusses India's impressive GDP growth, analyzing the 7.4% surge in Q4 and the sectors that contributed. She outlines the challenges of weak manufacturing and private investment, emphasizing the need for policy reforms. The conversation delves into real versus nominal GDP growth impacts, revealing insights into inflation's effects on economic health. Trade deals with the UK and US are also examined, alongside the potential for a RBI rate cut, highlighting the importance of domestic reforms in sustaining growth.
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Q4 GDP Growth Drivers
- India's Q4 FY25 GDP grew 7.4%, higher than expected mainly due to government investment and higher net indirect taxes.
- Excluding tax effects, the production side GDP growth was 6.8%, with construction and rural growth driving the expansion.
Public vs Private Investment Contrast
- Public investment sharply increased in Q4 FY25, driving growth while private investment remained sluggish and flat.
- Lack of business certainty and tariff improvements are key barriers to private investment revival.
Urban vs Rural Consumption Growth
- Urban consumption remains weak compared to rural, boosted mainly by rural sector's strong performance in Q4 FY25.
- Policy rate cuts and income tax reductions may revive urban consumption, but manufacturing growth is key for employment and sustained consumption.