Economy
India’s GDP growth likely improved to 6.3% in December quarter: Mint poll
Summary
India’s Q3 GDP growth is expected to improve primarily due to higher government spending and a revival in consumption.India’s economic growth likely rose to 6.3% in the December quarter from 5.4% the previous quarter after a rise in government spending and a revival in consumption, especially in rural areas, provided support, according to a median estimate of 23 economists polled by Mint. Despite the rise, growth will be more than two percentage points lower than the rise seen in the same quarter a year ago.
Gross domestic product (GDP) data for the third quarter of 2024-25 is scheduled to be released on 28 February. Additionally, the National Statistical Office (NSO) will also release the second advance estimate for the full year and may revise GDP estimates for the first two quarters.
Also Read: We can’t expect budget tax cuts to boost GDP growth all that much
While all economists polled by Mint expected growth to accelerate from the last quarter, their projections were in a wide range of 5.7-6.7%. Only three economists expected growth to remain sub-6%.
“India’s economic performance in Q3FY25 benefitted from a sharp ramp-up in aggregate government spending (Centre+state) on capital and revenue expenditure, high growth in services exports, turnaround in merchandise exports, and a healthy output of major kharif crops, which would have buffered rural sentiment," said Aditi Nayar, chief economist at Icra Ltd.
Even though urban consumption demand has been weak, economists said the consumer-focused sectors received some boost during the festive season.
According to the NSO’s first advanced estimates, the Indian economy is projected to grow 6.4% for 2024-25. If the poll prediction is realized, the economy would need to expand by 7.1% in the last quarter to meet the first advance estimate.
Also Read: Despite RBI's rate cut, spurring GDP growth is an uphill task
Amid slowing growth and easing inflation, the Reserve Bank of India (RBI) reduced the policy repo rate by 25 basis points for the first time in five years earlier this month to stimulate the economy. With inflation within the RBI’s target range of 2-6% and growth still benign, experts anticipate another rate cut in April's policy meeting.
“Going ahead, we expect the consumption demand to improve on the back of a reduction in tax burden and policy rate cuts. However, it will be crucial to see if the private capex recovers," said Sarbartho Mukherjee, an economist at CareEdge. “The global trade war will adversely affect India’s growth, inflation, and trade dynamics. However, there is still a lack of clarity on the extent of this impact."
