Synopsis: India's GDP growth accelerated to 6.2% in the third quarter of fiscal year 2024-25, up from 5.4% in the previous quarter, driven by robust rural demand and increased government spending. However, this growth remains below the 8.6% recorded in the same quarter last year. The government now projects full-year GDP growth at 6.5%, the lowest in four years.
In the third quarter of fiscal year 2024-25, spanning October to December 2024, India's Gross Domestic Product (GDP) experienced a growth rate of 6.2%, as reported by the National Statistics Office (NSO) on February 28, 2025.
This marks an improvement from the 5.4% growth observed in the previous quarter but falls short of the 8.6% growth recorded during the same period last year.
The real GDP at constant prices for Q3 FY25 is estimated at Rs. 47.17 lakh crore, up from Rs. 44.44 lakh crore in Q3 FY24.
Gross Value Added (GVA) also saw a year-on-year increase of 6.2%, while nominal GDP growth, which accounts for inflation, stood at 9.9%.
Several factors contributed to this economic rebound.
A favourable monsoon season led to improved agricultural output, particularly in major Kharif crops, boosting rural incomes and demand.
Government expenditure on infrastructure projects increased significantly, with public spending rising by 8.3% in Q3 compared to a 3.8% increase in the previous quarter.
Additionally, the festive season spurred a revival in consumer-centric sectors, further propelling economic activity.
Despite these positive developments, the 6.2% growth rate remains below the 8.6% achieved in the corresponding quarter of the previous year.
For the entire fiscal year 2024-25, the government has revised its GDP growth projection to 6.5%, slightly higher than the earlier estimate of 6.4%, yet this would represent the slowest growth rate in four years.
The construction sector emerged as a significant contributor, recording the highest growth at 8.6%, followed by financial, real estate, and professional services at 7.2%, and trade, hotels, transport, communication, and broadcasting-related services at 6.4%.
Private final consumption expenditure also rose by 7.6%, reflecting a rebound in consumer spending.
While the current growth trajectory is encouraging, challenges persist.
Global trade uncertainties, potential policy shifts in major economies, and domestic issues such as high unemployment and inflation could impact future growth.
Economists emphasize the need for structural reforms in land and labour laws, reduction of protectionist duties, and enhancement of workforce skills to sustain and accelerate economic growth.
Conclusion:
India's economy has demonstrated resilience with a 6.2% GDP growth in Q3 FY25, driven by strong rural demand and increased government spending.
However, to achieve higher and more sustainable growth rates, it is imperative to address underlying structural challenges and implement comprehensive reforms.
This approach will be crucial for India to realize its ambition of becoming a developed nation by 2047.
Disclaimer: The information presented in this article is based on data available up to February 28, 2025. Economic conditions are subject to change, and readers are advised to consult updated sources for the latest information.
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