India's GDP Growth Predicted to Reach 6.6% in Q3 of 2024-25: Analysis
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Synopsis
According to a recent report by Bank of Baroda, India's GDP is set to grow by 6.6% in the October-December quarter of 2024-25, down from 8.6% in the same period last year, driven by agriculture, enhanced government expenditure, and services.
Key Takeaways
- Projected GDP growth of 6.6% in Q3 2024-25.
- Government's capital expenditure increased to 47.7%.
- Agriculture growth expected at 4.5%.
- Services sector growth at 6.9%.
- Manufacturing growth anticipated to slow to 6%.
New Delhi, Feb 18 (NationPress) India's GDP is projected to experience a growth rate of 6.6 per cent during the October-December quarter of 2024-25. Although this marks a decline from 8.6 per cent in the same period of 2023-24, the economy remains strong, bolstered by agriculture, government spending, and services, as stated in a report by Bank of Baroda released on Tuesday.
The report emphasizes that the surge in the government's capital expenditure (capex) is a crucial factor in maintaining economic stability. It also notes resilience in the financial sector and rural demand.
Capital expenditure by the government has notably increased to 47.7 per cent in Q3FY25, up from 24.4 per cent in Q3FY24. This rise has spurred construction activities in key sectors such as highways, ports, and railways, resulting in the creation of more jobs and income opportunities.
The financial sector is showing positive signs, with credit and deposit growth on the rise. Additionally, rural demand is strengthening, evidenced by an uptick in sales of tractors and two-wheelers.
Growth in agriculture is anticipated to accelerate to 4.5 per cent during the third quarter, a significant rise from 0.4 per cent in Q3 FY24, attributed to improved foodgrain production and strong rabi acreage.
The services sector is expected to grow 6.9 per cent in the third quarter of the current fiscal year, only slightly down from 7.1 per cent in Q3FY24.
Trade and hospitality are projected to grow at 6.9 per cent, benefiting from the “experience economy”, while the financial sector is expected to see growth at 6.5 per cent.
However, the report indicates that manufacturing and industrial growth are moderating due to a high base effect, predicting industrial growth at 5.9 per cent, down from 10.2 per cent in Q3FY24.
Manufacturing growth is expected to decline to 6 per cent in the current financial year's third quarter, a decrease from 11.5 per cent in the same period last year, influenced by a high base effect and reduced corporate earnings, particularly in the crude oil, steel, and auto sectors.
Growth in the mining sector is also projected to decrease to 3 per cent, down from 7.5 per cent in the previous year.
The report also raises concerns regarding downside risks stemming from uncertainties in the global economy, including geopolitical tensions, trade wars, and economic fragmentation.
While India's economy remains robust, it faces challenges from global factors, including pressures on the currency and external sector, as noted in the report.
