After a dismal second quarter, when the country’s economy grew at a paltry 5.4%, the third quarter is expected to be better as most agencies tracking the Indian economy estimate the GDP to grow at anywhere in the 6-6.5% range. Most analysts expect consumption to improve amid enhanced government spending, and stable investments.
The Q3 GDP numbers will be published by the government on Friday February 28. Rating agency ICRA has projected the GDP to grow at 6.4% in the Q3 while India Ratings pegs the growth at 6.5%. SBI Research predicts economy to grow at 6.2-6.3% driven by rural economy, consistent wage growth, and strong agricultural performance.As per Aditi Nayar, chief economist, Head-Research & Outreach, ICRA, India’s economic performance in Q3 FY25 benefitted from a ramp-up in aggregate government spending (Centre + state) on capital and revenue expenditure, high growth in services exports, a turnaround in merchandise exports, healthy output of major kharif crops etc.
She noted that some consumer-focussed sectors saw a pick-up during the festive season, even as urban consumer sentiment fell slightly, and other sectors like mining and electricity saw an improvement after weather-related challenges in the previous quarter.
On private investment, Paras Jasrai, senior analyst, India Ratings & Research, says that investment demand is also expected to improve to 6.5% in 3QFY25 from a six-month low of 5.4% in the previous quarter lifted up by improved government capex. “The capital goods output firmed up to a year’s high of 7.3% yoy in 3QFY25. This along with a pickup in government spending would help in lifting up the GDP growth to 6.5% in 3QFY25,” he says.
Projecting a GDP growth of 6.2-6.3% for the December quarter, SBI Research says for the full fiscal ending March, the economy is likely to grow at 6.3%, which is among the lowest and 30 bps lower than the RBI projection. Nomura expects the GDP growth to disappoint in Q3 FY25 at 5.8% with GVA growth likely to rise to 6.0% from 5.6%.