India’s economy continues to show resilience and stability despite global uncertainties and trade-related disruptions, with key indicators pointing to sustained growth momentum in the final quarter of FY25, said the finance’s ministry’s Economic Review for March, released on Tuesday.
Rising GST collections, higher e-way bill generation, improved consumer sentiment, and a manufacturing revival indicated strengthening economic activity, while rural demand remained steady with increased household consumption, it added.
The document, prepared by the finance ministry’s department of economic affairs, said manufacturing was on the upswing, with the Reserve Bank of India’s industrial outlook survey reporting stronger production, order books and capacity utilisation, and its order books, inventories and capacity utilisation survey for Q3FY25 also indicating higher capacity utilisation and underscoring an industrial recovery.
The ministry added that inflation had eased significantly, with retail inflation falling to 4.6% in FY25 from 5.4% a year earlier—the lowest in six years—helped by government interventions and a favourable harvest that moderated food prices. In March 2025, India recorded its lowest year-on-year inflation since September 2019.
“While the overall inflation outlook has improved, supported by a rate cut and positive food price trends, geopolitical uncertainties warrant close monitoring,” the ministry added.
India’s retail inflation eased to a six-year low in March, driven by softer food prices. Consumer price index (CPI)-based inflation rose 3.34% year-on-year in March, down from 3.61% in February and 4.85% a year earlier. Food inflation also moderated to 2.69% in March from 3.75% in February and 8.52% in in March 2024.
Fiscal consolidation
The latest monthly Economic Review also highlighted the government’s continued commitment to fiscal consolidation, with the general government fiscal deficit steadily declining from its pandemic highs, thereby increasing the availability of domestic savings for private-sector investment and reducing the overall cost of capital.
India reported economic growth of 6.2% of GDP in Q3FY25, up from 5.6% in the previous quarter, leaving much to be done in the final quarter to achieve the full-year revised growth target of 6.5% set by the National Statistical Office.
Recently the International Monetary Fund (IMF) cut India’s growth forecast for the current fiscal year (FY26) from 6.5% to 6.2%, owing to US tariffs. The revision came after similar cuts by the Asian Development Bank (ADB), Moody’s Analytics and S&P Global, which downgraded India’s growth forecast for the same reasons.
The economic review also stressed the importance of timely action by policymakers and businesses to prevent uncertainty from dampening momentum, noting that India’s large domestic economy presented an opportunity to trigger a virtuous cycle of investment, income growth, demand, and capacity expansion. “In contrast to normal times, action and execution have greater impacts now. It is an opportunity not to be missed,” it added.
