Indian economy grows at 6.2% in Oct-Dec quarter, GDP growth for FY25 estimated at 6.5%

India’s National Statistics Office (NSO) published the latest quarterly (October- December) GDP figures on Friday (February 28), showing a growth rate of 6.2 per cent.

For the same quarter, nominal GDP growth has been estimated at 9.9 per cent.

Year-on-year, GDP growth has slowed from 8.6 per cent, but compared to the previous quarter, it has risen from 5.4 per cent.

Looking ahead, the government projects a real GDP growth rate of 6.5 per cent for the financial year 2024-25.

For the full financial year 2023-24, India achieved a real GDP growth rate of 9.2 per cent, the highest annual growth in 12 years, except for the post-pandemic rebound in 2021-22.

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“Growth Rate of Real GDP for 2024-25 is estimated as 6.5%. Real GDP has observed a Growth Rate of 6.2% in Q3 of FY 2024-25,” said a press release.

Rural demand played a key factor

Rural demand played a crucial role in driving GDP growth between October and December.

A favourable monsoon boosted agricultural output, increasing the production of major Kharif crops and raising rural incomes.

As a result, agriculture growth is expected to rise to 4.5 per cent in Q3 FY25, a significant jump from 0.4 per cent in the same quarter last year.

The services sector also picked up. The sector logged a faster rate of growth at 7.4 per cent compared with 7.2 per cent in the previous quarter.

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Manufacturing sector disappoints

However, manufacturing remained sluggish, with a nominal rise from 2.1 per cent in the previous quarter to 3.5 per cent this quarter.

On the expenditure side, both private and government consumption saw an uptick, but capital formation remained subdued at 5.7 per cent, slightly down from 5.8 per cent in the previous quarter.

As of January, the government had utilised only 74.4 per cent of its revised capital expenditure target of ₹10.2 lakh crore ($115 billion).

India’s economic growth outlook

India’s GDP growth has slowed in recent months, with the economy expanding by 5.4 per cent in the July-September quarter of 2024– the lowest in nearly two years. A slowdown in manufacturing, mining, and consumer spending contributed to the weaker performance.

The economy is expected to maintain a similar growth pace in the next fiscal year.

Reports earlier suggested that India’s economic growth picked-up in the third quarter of the financial year on the back of improved rural consumption following a good monsoon, and a significant uptick in government spending that had been impacted earlier in 2024 due to a multi-phase parliamentary election.

India, Asia’s third-largest economy, previously saw a sharp slowdown in expansion during the July-September quarter, with GDP growth slipping to 5.4 per cent — the slowest pace in seven quarters. Economists back then blamed the slowdown on weak urban demand and a delay in government spending.

The Reserve Bank of India (RBI) earlier estimated the September-December GDP growth rate to be 6.8 per cent.

The latest GDP figures are likely to improve further with the government announcing new measures in the Union Budget 2025, including personal income tax relief.

(With inputs from agencies)