GDP recovers in Q3 but FY25 target of 6.5% still far away

CEA V. Anantha Nageswaran said India's growth momentum is strong despite risks

- Rhik Kundu Nikita Prasad

India's economic growth engine showed some spark in the December quarter to recover from a low in the September quarter. Yet, the 6.2% GDP (gross domestic product) growth reported was the slowest since Q4FY23, barring one quarter-the previous one (Q2), when it recorded 5.6% (revised estimate).

That leaves much to be done in the final quarter of the fiscal to achieve the full-year revised growth target of 6.5% put out by the National Statistical Office on Friday. To be sure, even at 6.5%, GDP growth for FY25 would be 270 basis points (bps) lower than last fiscal's (revised) 9.2%.

The third quarter's growth rate, supported by government spending and consumption amid festive demand, was still far from the 9.5% (revised estimate) recorded in the corresponding quarter of the previous fiscal. A mint poll of 23 economists had predicted 6.3% growth for Q3. Meanwhile, gross value added (GVA), which measures the total value of goods and services produced in an economy, also grew 6.2% in Q3.

Tepid growth in manufacturing and mining impacted overall GDP growth in Q3, despite high growth recorded by agriculture, electricity, construction and tertiary sectors.

Chief economic adviser V. Anantha Nageswaran remained positive during a presentation following the release of the latest GDP data. While he noted that global economic uncertainty persists due to trade policies, inflation risks, and market volatility, India's growth momentum remains strong.