India’s Q3 FY25 GDP Growth Set at 6.4%

India’s economy is set to grow at 6.4% in Q3 FY25, according to a projection by ICRA, up from 5.4% in the previous quarter. This growth is being driven by higher government spending and a rebound in exports, strengthening key economic sectors. The Gross Value Added (GVA) is expected to rise by 6.6%, with industry growing at 6.2%, services at 7.7%, and agriculture at 4.0%. A notable highlight is the record $36.9 billion in service exports in December 2024, along with a strong recovery in merchandise exports.

What is Driving India’s Economic Growth in Q3 FY25?

Increased Government Spending: Public sector investments, particularly in infrastructure and social welfare, have played a key role in boosting demand and economic activity.

Export Revival: Service exports reached a new high, and merchandise exports recovered significantly, contributing to overall economic momentum.

Industrial and Service Sector Expansion: The service sector showed the strongest growth (7.7%), followed by industry (6.2%), both benefiting from stable demand and policy support.

How Does This Growth Compare with Other Projections?

The State Bank of India (SBI) has provided a slightly lower GDP growth estimate of 6.2% to 6.3% for Q3 FY25. SBI’s assessment is based on factors such as capital expenditure trends, strong demand, and improved corporate earnings (EBIDTA). Additionally, their analysis found that 74% of economic indicators showed acceleration in Q3, compared to 71% in Q2.

What Are the Challenges and Future Economic Outlook?

While the IMF has maintained India’s growth forecast at 6.5% for both FY25 and FY26, there are challenges that could impact future growth:

• High unemployment rates remain a concern despite economic expansion.
• Food inflation and weak consumer spending could dampen overall demand.
• Structural reforms in labor and land laws are necessary for long-term sustainable growth.

India continues to be one of the fastest-growing economies globally, supported by strong domestic demand and government policies. However, maintaining this momentum will require continued policy support, economic reforms, and investment in workforce development.

India’s Q3 FY25 GDP Growth at 6.4% – Key Highlights