India’s GDP Growth at 8.4% in Q3 FY24, Paves the Way for Strong FY25
The Indian economy saw significant growth in the third quarter of the fiscal year 2023-24, surpassing expectations and defying projections. India’s GDP expanded by 8.4% during the October-December period, maintaining momentum after exceeding 8% growth in the two previous quarters.
Official government data released on Thursday revised the full-year FY24 GDP growth estimates to 7.6% from the earlier projection of 7.3%.
Strong private-sector investment and increased services spending contributed to the higher-than-expected Q3 GDP growth, which surpassed the Reserve Bank of India’s projections.
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Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India, anticipates FY24 GDP growth to be around 8%.
Economists noted a significant gap between GDP and gross value added (GVA) growth, likely due to higher growth in government net indirect taxes. Despite a slight increase in real GDP estimates, the value remained 10% lower.
Looking ahead to FY25, economists raised their growth projections following the strong Q3 GDP data. UBS increased its estimates for FY25 real GDP growth to 7% from 6.2% earlier.
Tanvee Gupta Jain, UBS India Economist, expects a gradual recovery in consumption growth, particularly in premium and rural segments. Urban demand is predicted to normalize, while the investment recovery is expected to broaden.
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Economists at Kotak Institutional Equities have adjusted their GDP growth forecast to 6.6% in FY25, up from the earlier estimate of 6.3%.
This update takes into account the center’s ongoing capex push, albeit at a slower rate, as well as states’ capex, a delay in the anticipated global growth slowdown, and ongoing weak consumption growth trends.
Looking ahead, the economists anticipate India GDP growth to hold steady at 6.5% over the medium term, as key drivers align with current patterns of 8.4% India’s GDP Growth in Q3.
Meanwhile, Barclays has also raised its India GDP growth forecast, predicting a growth rate of 7.8% for FY24, up 110 basis points from previous estimates.
For FY25, the bank’s economists now expect a growth rate of 7%, revised upwards by 50 bps.
As India’s economy continues to show resilience, experts anticipate improvements in exports and a recovery in private corporate capex post-elections. Overall, the outlook for FY25 remains positive, with expectations of continued growth and recovery in various sectors.
