GDP grows 6.2% in Q3; FY25 output still seen at a four-year low of 6.5%

New Delhi: India’s economy demonstrated steady progress in the third quarter (October-December) of the fiscal year 2024-25, with real GDP increasing by 6.2 per cent, according to the latest estimates from the National Statistics Office (NSO). This growth reflects the country’s resilient economic performance, driven by strong consumer demand, continued government investment in infrastructure, and robust industrial activity. However, despite this positive momentum, the full-year GDP growth forecast is projected to be at a four-year low of 6.5 per cent, indicating a moderation in the post-pandemic recovery.

The Second Advance Estimate (SAE) for the 2024-25 financial year projects India’s real GDP growth at 6.5 per cent, with nominal GDP expected to grow by 9.9 per cent. These figures represent a decline from the 9.2 per cent expansion achieved in 2023-24, a year marked by the highest growth in over a decade (excluding the post-COVID rebound in 2021-22). This slowdown is attributed to various factors, including a high base effect, global economic uncertainties, and policy measures aimed at controlling inflation.

Despite facing global challenges such as geopolitical tensions, trade disruptions, and economic slowdowns in major countries, India’s Q3 performance highlights the strength of its domestic market. Key drivers of growth included private consumption and capital investment, along with robust performance in essential sectors.

The construction industry experienced significant growth of 8.6 per cent, reflecting the government’s strong commitment to infrastructure development and urbanisation.

Manufacturing, which had been a key growth driver in the previous year, showed signs of stabilisation and contributed positively to overall economic expansion. The financial sector also grew by 7.2 per cent, fueled by higher credit availability, improved financial services access, and increasing investor confidence.

Meanwhile, the trade, transport, and hospitality sectors benefited from a surge in domestic travel and international tourism, with a recorded growth of 6.4 per cent. The services sector, a major contributor to India’s GDP, continued its recovery, alongside a 7.6 per cent increase in Private Final Consumption Expenditure (PFCE) — a notable improvement from 5.6 per cent in

the previous year, signalling an increase in consumer confidence and purchasing power.

While the GDP growth figures imply steady progress, the overall economic growth for 2024-25 is expected to be the slowest in four years at 6.5 per cent. This is primarily

due to the normalisation of economic activity following the sharp rebound

seen in the post-pandemic years. The First Revised Estimates for 2023-24, which indicated GDP growth at 9.2 per cent, were propelled by exceptional performances in manufacturing (12.3 per cent), construction (10.4 per cent), and financial services (10.3 per cent).

In contrast, the projected 6.5 per cent growth for FY25 points to a moderation in growth rates, aligning with expectations of a gradual return to trend levels. Economists suggest that factors such as declining external demand, tighter monetary policy, and cautious business sentiment contribute to this relative slowdown.

Nevertheless, sustained government spending on infrastructure, digitalisation, and financial inclusion is expected to cushion external pressures.

The government’s policy framework has been crucial in maintaining macroeconomic stability. Although inflation remains a concern, it is being managed through a mix of monetary tightening and supply-side interventions. Additionally, trade policies and fiscal discipline have helped mitigate external risks.

Looking ahead, sustaining high growth levels will require further investments in technology, innovation, and manufacturing. The government’s Make in India initiative, along with the expansion of digital infrastructure and financial sector reforms, will be vital in strengthening India’s economic foundation.

Despite global uncertainties, India is well-positioned to address economic challenges while sustaining a robust growth trajectory.

The latest NSO projections reaffirm confidence in India’s ability to navigate short-term slowdowns without straying from its long-term growth aspirations.

With ongoing policy support and structural reforms, India’s economy is poised to remain one of the fastest-growing major economies in the world.