New Delhi: With the increased government spending, which is expected to stimulate economic activity in the country, domestic rating agency ICRA on Tuesday said that India’s economy measured by gross domestic product (GDP) data is projected to rise to 6.4 percent in the third quarter of FY2025.
The Indian economy grew at 6.7 per cent in April-June, but it slowed to a seven-quarter low of 5.4 per cent in the September quarter on sluggish government capital expenditure due to general elections and weak consumption demand. But it has been observed that some consumer-focussed sectors witnessed a pick-up during the festive season, and other sectors such as mining and electricity also had an improvement after weather-related challenges in the previous quarter.
“India’s economic performance in Q3 FY2025 benefitted from a sharp ramp-up in aggregate government spending (Centre and state) on capital and revenue expenditure, high growth in services exports, a turnaround in merchandise exports, healthy output of major kharif crops etc, which would have buffered rural sentiment,” ICRA chief economist Aditi Nayar said in a statement.
The National Statistical Office (NSO) is expected to release the October- December growth estimates on February 28. It will also release the second advance estimates of GDP for the current fiscal. In the first advance estimates released in January, the NSO projected GDP growth at a 4-year low pace of 6.4 per cent in the current fiscal. The RBI expects growth to be 6.6 per cent.
“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,” the economist said.
The rating agency, however, said that 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. “This includes capital and infrastructure goods’ output, cement production, engineering goods’ exports, and capital spending of the Centre and state governments among others,” the agency said.
