Farm Sector Emerges as Key Driver in India’s Slowing Economy
India’s agriculture sector boosted the economy with 4.4% growth in FY25, supporting the overall 6.5% GDP rise despite a slowdown. The primary sector grew 5% in Q4 FY25, aiding rural demand amid positive monsoon forecasts. Construction and services also showed strong gains, but economists warn of a patchy recovery. Q1 FY26 GDP data will be released in August 2025.
Amidst a broader economic slowdown, India’s crucial agricultural sector emerged as a significant contributor to the nation’s 6.5 per cent real Gross Domestic Product (GDP) growth in the financial year 2024-25 (FY25), according to provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday. This comes as the overall GDP growth registered a four-year low, down from 9.2 per cent in the previous fiscal year.
The primary sector, which encompasses agriculture, livestock, fishing, and mining, posted a robust 4.4 per cent growth in FY25, a notable improvement from 2.7 per cent in FY24. This upward trend was particularly pronounced in the January-March quarter (Q4 FY25), where the primary sector expanded by a strong 5.0 per cent, a substantial increase from just 0.8 per cent in Q4 FY24. This strong performance in agriculture provided crucial support to the overall economy, which saw a 7.4 per cent growth in Q4 FY25.
Madan Sabnavis, Chief Economist at Bank of Baroda, highlighted the sector’s pivotal role. “The strong performance of agriculture and services has enabled growth of 6.5% in FY25 and 7.4% in Q4,” he stated. Looking ahead, Sabnavis expressed optimism: “With good monsoon being projected, agriculture should continue to maintain growth in the region of 3.5-4%, which augurs well for consumption demand from the rural end.”
The agricultural sector’s improved performance stands out amidst a period of moderation for the Indian economy. While the overall 6.5 per cent GDP growth for FY25 marks a four-year low, and the Q4 growth of 7.4 per cent was lower than the 8.4 per cent seen a year ago, the resilience of farming and allied activities offered a critical buffer.
Aditi Nayar, Chief Economist, Head – Research & Outreach, ICRA Limited, also pointed to agriculture’s positive impact. “With an upward revision in the pace of Q3 GDP expansion, led by agriculture, the full year GDP growth printed in line with the second advance estimate of 6.5%,” she noted.
Beyond agriculture, other sectors contributed to the economic activity. Construction continued its strong run, leading with 9.4 per cent growth in FY25 and a striking 10.8 per cent in Q4. Public administration, defence, and other services grew 8.9 per cent for the year, while financial, real estate, and professional services saw a 7.2 per cent increase.
Despite these positive sectoral contributions, the overall economic picture remains one of a patchy recovery. Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, remarked, “The high-frequency data in the last few months continues to point towards a patchy recovery, with the sequential momentum suggesting moderation compared to the previous quarter.”
However, the continued strength of the agricultural sector, especially with positive monsoon forecasts, bodes well for rural consumption and could provide a stable foundation for future growth. The Ministry of Statistics and Programme Implementation will release the next set of quarterly GDP estimates for April-June 2025 (Q1 FY26) on August 29, 2025, which will further clarify the trajectory of India’s economy and the continued role of its agricultural backbone.
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Source : Rural Voice
