Indian economy is likely to have recovered in October-December quarter (Q3) of Fiscal Year 2024-25 between 6.3 to 6.5 per cent. However, one research firm sees growth at 5.8 per cent. The government will release the data on Friday.
Economic growth, measured in terms of GDP was 8.6 per cent in Q3 of Fiscal Year 2023-24. However, since then, it is on declining path and slipped to 5.4 per cent in July-September quarter (Q2) of current fiscal, which was lowest in second quarter. One key reason for low growth was slowdown in consumption, especially in urban area.
Now, government feels that there are some green shoots. Consumption has also improved. At the same time, government expenditure, more in terms of capital expenditure, has seen rise. All these are expected to have impact on growth number, and it is expected to cross 6 per cent. Officials expect it could touch 6.5 per cent
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“As per our model, real GDP growth for Q3 FY25 is expected at 6.3 per cent Globally, India remains the world’s fastest-growing major economy despite the recent moderation,” Care Edge said in a note. In its report, DBS Group research said that a catch-up in government capex spending, passage of idiosyncratic factors including unfavourable weather, better kharif crop output, festive demand, and better production numbers are few of the factors which should lift 3QFY25 output. “This is counterweighed by an absence of pick-up in corporate profitability and service sector activity, signaled by slowing credit growth and moderation in GST collections,” it said.
However, foreign firm Nomura has slightly different take. “We expect GDP growth to disappoint in Q3 FY25 (October-December) at 5.8 per cent y-o-y, albeit up from 5.4 per cent in Q2 FY25, with GVA growth likely to rise to 6 per cent from 5.6 per cent,” the agency said. Further, it expects consumption and government spending to improve, stable investments and a negative contribution from net exports. On the supply side, it expects agriculture growth to remain strong, industrial growth to improve mildly, stable growth in construction and ‘financial services, real estate and professional services’, and underwhelming trends in the ‘trade, hotels, transportation and communication’ sector.
Early data for January reveal some green shoots, but the growth landscape still looks mixed. “Our medium-term Nomura India Composite Leading Index (NICLI) still points to an ongoing cyclical growth slowdown. We forecast GDP growth of 6 per cent y-o-y in FY25 and 5.9 per cent in FY26,” it said. It believes that policies have become counter-cyclical to tackle the slowdown. On monetary policy, “we continue to expect 75bp of additional cuts, more than consensus (25-50bp more), to a terminal rate of 5.5 per cent by end- 2025, with the next cut in April,” Nomura said.
