India's economy grew by 6.2 per cent in October-December, marginally below expectations but faster than in the previous quarter on the back of increased government and consumer spending, data released on Friday showed. The growth in gross domestic product was slightly lower than the 6.3-per cent expansion projected by analysts in a Reuters poll, and the central bank's estimate of 6.8 per cent. The world's fifth-biggest economy grew 5.6 per cent in the previous quarter.
Gaura Sen Gupta, Economist, IDFC First Bank, Mumbai, says the Q3 GDP growth is "marginally better than our expectations". The pickup in growth moment reflects some improvement in listed companies profit growth with moderation in input cost. Agriculture growth also showed a strong pickup led by robust Kharif crop output.
Meanwhile, on the demand side, private consumption growth picked-up reflecting revival in rural demand.
"After incorporating Q3 FY25 GDP, we still see FY25 full-year GDP at 6.2 per cent to 6.3 per cent. We continue to expect a shallow rate-cut cycle from the RBI (Reserve Bank of India) with another 25bps to 50bps cut in 2025. Depreciation pressure on INR (rupee) will keep the rate-cut cycle shallow in our view."
Harry Chambers, Assistant Economist, Capital Economics, London, says Stepping back, the big picture is that the economy is still fairly soft by India's recent standards. However, with the RBI shifting its priorities from controlling inflation to supporting growth, economic activity should begin to pick up further. This week's reversal of the tighter bank lending restrictions introduced in late 2023, as well as the further monetary policy loosening from the "central bank that we expect, will boost household consumption and investment in particular". - Reuters
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