India’s economic growth could touch 7.2% in FY25, or even surpass it, a senior official from the ministry of statistics and programme implementation (MoSPI) told FE, citing many high frequency indicators that have pick up, particularly since August.

“The sub-7% growth recorded in Q1FY25, will be offset by higher than expected growth in the other three quarter’s growth prints,” the official said. “Also, the data that’s coming in shows the first quarter’s growth (of 6.7%) could be revised upwards,” the person added.

The Reserve Bank of India (RBI) has projected India’s GDP to grow 7.2% in the current financial year. But due to a slower than projected growth (of 7.1% in Q1FY25), economists say the full year growth could be around 7% or slightly lower. The International Monetary Fund (IMF) and the World Bank (WB) have projected the country’s GDP growth at 7% in FY25.

The ministry official explained that a better monsoon and lower inflation is expected to push up consumption (in Jul-Mar), which will also lead to higher manufacturing output.

“GST collections data is showing a robust year-on-year growth. The IIP (Index of Industrial Production) growth is decent so far, but will likely rise in the coming months,” said the official. The GST monthly collections data is an indicator of consumption activity in the economy, and IIP tells the level of factory output.

So far, in April-August of FY25, the monthly GST collections growth has averaged 10.1%, but officials in the finance ministry expect the growth for the full year to average over 11%. In FY24, the GST collections growth had averaged 11.7%, and in April-August of FY24, it averaged 11.3%. The IIP growth, in April-July of FY25, has averaged 5.2% as against 5.1% in the corresponding period of FY24.

A recent paper by the RBI staff said that “household consumption is poised to grow faster in Q2 as headline inflation eases, with a revival of rural demand is already taking hold”.

The staff paper said that the demand for fast moving consumer goods (FMCG) is also accelerating as companies target older customers with healthy lifestyle products. Another consumption booster is the ramping up of hiring by e-commerce majors ahead of the festival season, not just in the metros but in tier 2 and 3 cities as well, it said.