According to data released by the Indian government on Friday, May 30th, the Indian economy expanded at a higher-than-expected rate of 7.4% in the first quarter ending in March of this year. This marked the strongest quarterly growth for the country in the fiscal year 2024-2025 (April 1, 2024, to March 31, 2025).
The GDP data for the fourth quarter of the fiscal year 2024-2025 (January to March of this year) in India was significantly higher than the expected 6.7% growth rate according to economists surveyed by Reuters.
The annual economic growth rate for India in the fiscal year 2024-2025 stood at 6.5%, in line with the government’s forecast in February.
Due to strong domestic consumption and a relatively lower reliance on exports, the growth prospects for the Indian economy remain relatively robust.
As the third largest economy in Asia, India is benefiting from the Reserve Bank of India’s loose monetary policy. The central bank cut interest rates for the second consecutive month to 6% last month and adopted an accommodative stance to boost economic growth. It is expected that the central bank will further reduce rates in June.
India’s economy is also partially benefiting from the improvement in consumer demand in rural areas. Data from market research firm NielsenIQ shows that consumption accounts for over half of India’s economy, with rural sales of consumer goods accounting for nearly 40% of overall consumer goods sales in the first quarter of 2025.
The International Monetary Fund (IMF) predicts that India’s economy will reach $4.187 trillion in 2025, slightly surpassing Japan’s $4.186 trillion, potentially making India the world’s fourth largest economy.
Furthermore, according to U.S. government data, India had a trade surplus of nearly $46 billion with the United States in 2024.
In April, the Trump administration imposed “equal” tariffs on imported goods from India, with rates reaching 26%. Subsequently, the U.S. lowered the rates to 10% for a period of 90 days until the end of July to allow time for negotiations. India could be the next country after the UK to reach an agreement with the U.S. Reports suggest that President Trump earlier this month stated that India has proposed implementing zero tariffs on all U.S. imported goods.
(This article referenced CNBC’s report)