Economy Expected To Grow 6.4% In Q3, Says ICRA
The National Statistical Office will release the October–December growth estimates on Feb. 28.
ICRA Ltd. expects India's economy to grow 6.4% in the December quarter on enhanced government spending.
The Indian gross domestic product grew at 6.7% in April–June. However, in the September quarter, it dipped to a seven-quarter low of 5.4%. This slowdown was caused by sluggish government capital expenditure due to general elections and weak consumption demand.
According to ICRA Chief Economist Aditi Nayar, India's economic performance in the third quarter of financial year 2024–25 benefited from a sharp ramp-up in aggregate government — Centre and state — spending on capital and revenue expenditure.
It also helped that services exports witnessed high growth and there was a turnaround in merchandise exports. Healthy output of major kharif crops buffered rural sentiment.
Some consumer-focused sectors saw a pickup during the festive season, even as urban consumer sentiment dipped slightly, and other sectors like mining and electricity saw an improvement after weather-related challenges in the previous quarter.
"Overall, while we expect the pace of GDP and the GVA expansion to rise in Q3 FY2025 relative to the seven-quarter low prints for the previous quarter, marking an upturn, the performance may remain inferior to the NSO's initial estimates for Q1 FY2025," Nayar said.
The National Statistical Office will release the October–December growth estimates on Feb. 28. It will also release the second advance estimates of the GDP for the current fiscal.
In the first advance estimates released in January, the NSO projected the GDP growth at a four-year low pace of 6.4% in the current fiscal. The RBI expects growth to be 6.6%.
ICRA has projected the economy to grow at 6.4% in Q3 from 5.4% in Q2, benefitting from enhanced government spending amid uneven consumption, it said in a statement.
India's investment activity improved in Q3, as reflected in the uptick in the YoY growth in several investment-related indicators vis-a-vis Q2, the rating agency said.
This includes capital and infrastructure goods' output, cement production, engineering goods' exports, and capital spending of the Centre and state governments.
The year-on-year expansion in the government's capex surged to a six-quarter high of 47.7% in Q3 from 10.3% in the previous quarter.
(With inputs from PTI)
