Economy projected to grow 6.4% in Q3 FY25 as government spending increases: ICRA

ICRA projected India’s Gross Domestic Product (GDP) to grow by 6.4% in the December quarter (Q3 FY25), driven by increased government spending despite uneven consumption patterns. After a 6.7% growth in Q1 FY25, the economy slowed to 5.4% in September due to weak consumption demand. ICRA's Chief Economist, Ms. Aditi Nayar, noted that Q3 FY25 growth was bolstered by higher capital and revenue expenditure from central and state governments, robust services exports, a recovery in merchandise exports, and strong output from major Kharif crops. Some consumer-focused sectors also saw a boost during the festive season, while sectors like mining and electricity recovered from previous weather-related challenges.

ICRA further highlighted an uptick in India’s investment activity in Q3 FY25, with YoY growth in key indicators like capital and infrastructure goods output, cement production, engineering goods exports, and government capital spending. The government’s capital expenditure surged by 47.7% YoY in Q3 FY25, marking a six-quarter high. The National Statistical Office (NSO) is set to release the official GDP growth estimates for Q3 FY25 on February 28, 2025, with ICRA projecting 6.4% growth for the quarter, reflecting improved investment activity despite challenges in consumption. The Reserve Bank of India has projected a slightly higher growth rate of 6.6% for FY25.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.