India's GDP Grows 6.2% In Q3, Meeting Estimates; Full-Year Growth Pegged At 6.5%

India's economy grew at a faster pace than in the previous quarter, but growth remained slow compared to the same period a year ago.

The gross domestic product grew 6.2% over a year earlier in the October-December quarter, according to the latest estimates released by the government's statistical agency.

This was compared with a revised growth of 5.6% in the July-September quarter.

The gross value added, which strips out indirect tax and subsidies, is estimated to have grown at 6.2% in the third quarter.

GDP growth for the quarter was in line with estimates. A Bloomberg poll of economists pegged GDP and GVA growth at 6.2% for the third quarter.

For the full year, GDP growth is pegged at 6.5% as per the second advance estimates, compared to 6.4% as per the first advance estimates.

Meanwhile, the GDP growth in fiscal 2023-24 was revised to 9.2% from 8.2% estimated previously.

The rebound in growth momentum in December quarter was largely anticipated, as indicated by several high-frequency macroeconomic indicators, said Rajani Sinha, chief economist at Care ratings.

"We expect the growth momentum to rebound further in the coming quarters," Sinha said, adding that 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. The Mahakumbh celebrations also supported consumption demand and sectors such as trade, hotel and transport in the ongoing quarter, she added.

However, rising global policy uncertainty, especially on the trade front, geopolitical tensions, and weather events, remains a key monitorable, she cautioned.

Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, also said that the implied fourth quarter GDP figures at around 7.5% look significantly optimistic. "We expect the FY25 GDP figure to be lower than CSO's estimate by around 20-30 basis points," she said, adding that GDP growth in fiscal 2026 is likely to be 6.4%, with a clouded outlook and downside risks amid global uncertainties.

Industry Trends

• Agriculture rose 5.6% in the third quarter, as compared with a revised 4.1% growth in the second quarter. For the full year, growth is pegged at 4.6%.

• Mining grew 1.4%, up from a contraction of 0.3% in the previous quarter. For the full year, the sector is set to grow 2.8%.

• Manufacturing expanded 3.5%, as against 2.1% in the prior quarter. For the full year, growth is pegged at 4.3%.

• Electricity and other public utilities expanded by 5.1% versus 3%. For the full year, the sector is estimated to grow 6%.

• Construction grew 7%, compared with 8.7%. For the full year, growth is pegged at 8.6%.

• Trade, hotels, transport, and communication expanded 6.7% versus 6.1%. For the full year, the sector is set to grow 6.4%.

• The financial services sector grew 7.2%, same as the previous quarter. For the full year, the sector is set to grow 7.2%.

• The public administration segment grew 8.8%, same as the preceding quarter. For the full year, the sector is set to grow 8.8%.

Expenditure Trends 

• Private consumption, reflected in private final consumption expenditure, grew 6.9% in the December quarter, compared to 5.9% in Q2. For the full year, growth is pegged at 12.3%.

• Government final consumption expenditure grew by 8.3%, vs 3.8% in Q2. For FY25, growth is estimated at 8.2%.

• Investments, as reflected by gross fixed capital formation, grew by 5.7%, compared to 5.8% last quarter. For the full year, growth is estimated at 6.9%.