What is India's GDP growth forecast for Q4 of 2024-25?

New Delhi, May 16 (NationPress) The Indian economy is projected to expand between 6.8% and 7% in the fourth quarter of the fiscal year 2024-25, primarily propelled by the agriculture sector, as indicated in a report from Bank of Baroda published on Friday.

For the entire fiscal year, the growth estimate stands at 6.2% to 6.4%, with the report noting that India’s economic performance remains superior compared to other nations, backed by robust macroeconomic fundamentals.

Looking forward to FY26, growth is anticipated to remain stable at 6.4% to 6.6%, bolstered by monetary easing, reduced inflation, strong domestic demand fueled by budgetary initiatives, and ongoing capital expenditure, according to the report.

Nevertheless, potential geopolitical tensions and global tariff implementations could adversely affect this optimistic outlook.

The report forecasts a strong agriculture growth of 7.7% for Q4FY25, a significant rise from the 0.9% growth recorded in Q4FY24. This growth is attributed to record food grain production, as detailed in the second advance estimates which encompass kharif and rabi crops.

While Q4 growth is expected to surpass Q3, it remains uneven across various sectors, with some experiencing better performance than others.

In the industrial sector, the mining industry is projected to achieve 1.5% growth in Q4FY25, an improvement from 0.8% growth during the same timeframe last year. In contrast, the manufacturing sector is likely to see a decrease to 1.8% from 11.3% in Q4FY24, partly due to an unfavorable base and declining corporate earnings. Industries like iron and steel, capital goods, and textiles have shown lower profit margins despite falling commodity prices. The electricity sector is also expected to slow down to 5.5% compared to 8.8% in Q4FY24.

The construction sector is anticipated to maintain strong growth driven by enhanced steel and cement output in Q4. An ongoing push on government capital expenditure is favorable for this sector.

In terms of services, trends appear mixed. The wedding season and the Mahakumbh are likely to bolster not just the hospitality sector, but also transport, logistics, food, and beverages. The trade, hotels, and transport sector is projected to grow by 6.4% in Q4, up from 6.2% in Q4FY24. GST collections continue to rise steadily. Growth in the financial sector is expected to decline to 6.6% from 9% due to reduced credit growth in the same timeframe.

Public administration and defense are likely to experience some acceleration amidst increased net revenue expenditure.

Looking ahead, the report indicates that rural demand in FY26 is expected to maintain its upward trajectory, bolstered by favorable monsoon expectations. Neutral ENSO conditions are predicted in the upcoming months (NOAA), which bodes well for agricultural productivity. Consumption is also anticipated to accelerate, supported by higher disposable income due to new tax incentives. Furthermore, the continued easing cycle, attributed to lower inflation, will cushion growth. Decreased commodity prices are also expected to provide additional support.

“Given these factors, we foresee the Indian economy achieving a growth rate of 6.4% to 6.6% in FY26. However, there are potential risks, especially in the external sector, stemming from global developments, particularly concerning evolving tariff challenges. While possible bilateral trade between the US and India could yield positive results, adverse geopolitical conflicts or extreme weather conditions may hinder growth,” the report concluded.