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Below the Perspective on GDP Data by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings

” India's GDP growth for the third quarter registered at 6.2%, reflecting a significant improvement compared to the 5.6% growth recorded in Q2 FY25. For full year FY25, the second advance estimate puts the GDP growth at 6.5%, higher than the 6.4% estimated earlier. The healthy 6.5% growth for FY25, following the higher revised growth of 9.2% in FY24, is a positive indication.

The rebound in growth momentum in Q3 was largely anticipated, as indicated by several high-frequency macroeconomic indicators, including improved GST collections, public spending, electricity generation, and a recovery in export performance. On the demand side, recovery in consumption growth, government expenditure and export growth look encouraging. Due to better agricultural activities and falling inflation, rural consumption demand has performed well. Agricultural activities remained strong, aided by robust Kharif output growth and healthy Rabi sowing growth. However, investment growth continues to remain muted, which is a cause of concern. Despite a strong uptick in the public capex in Q3, investment growth has continued to slow over the past three quarters. Additionally, industrial and manufacturing activities rebounded in Q3 but continues to remain muted.

We expect the growth momentum to rebound further in the coming quarters. Factors such as recovering rural demand, lower tax burden, policy rate cuts, falling food inflation, and recovery in public capital expenditure should support improvement in economic activity going ahead. Festivities amidst Maha-Kumbh celebrations in Q4 should also support consumption demand and sectors such as trade, hotel and transport. A sustained recovery in consumption will be critical to drive a meaningful uptick in corporate capex. However, rising global policy uncertainty, especially on the trade front, geopolitical tensions, and weather events, remains a key monitorable. Overall, we expect GDP growth of around 7% in Q4 FY25 and 6.7% for FY26.’’

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