India's Q3 FY25 GDP Forecast Reflects Positive Trends from Government Spending and Consumption
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Synopsis
India's GDP is expected to show a growth of 6.3-6.4% in Q3 FY25, driven by increased government spending and improved household consumption during the festive season. Key factors include higher capital expenditure and robust agricultural productivity.
Key Takeaways
- GDP growth for Q3 FY25 projected at 6.3-6.4%
- Government capital expenditure increased by 30%
- Private consumption expected to rise to 6.4%
- Strong agricultural output boosts rural consumption
- Services sector shows upward trend
New Delhi, Feb 26 (NationPress) India's GDP growth for Q3 FY25 is projected to exhibit an upward trend and is estimated to fall between 6.3% and 6.4%, mainly fueled by heightened government expenditure and enhanced household consumption during the festive period, as per expert analyses on Wednesday.
The government's capital expenditure soared to Rs 2.7 lakh crore, representing an approximate 30% increase compared to the average of the initial two quarters, which had been relatively subdued due to general elections.
“This surge was strategically aimed at boosting economic growth amidst inconsistent household consumption patterns. The Private Final Consumption Expenditure (PFCE), accounting for 58% of GDP, is anticipated to increase to 6.4% in Q3, following a dip in Q2 (5.4%), benefiting from festive demand,” stated Mahendra Patil, Founder and Managing Partner at MP Financial Advisory Services.
Agricultural productivity remained robust, bolstered by favorable monsoons and enhanced Kharif crop yields, which positively influenced rural consumption.
The uptick in consumption (attributed to the festive season), augmented government spending, and improved agricultural output also supported the services sector in Q3 FY25. Additionally, the services exports displayed an upward momentum in Q3 FY25, he added.
The economists at SBI have projected India's GDP growth at 6.2%-6.3% for Q3 (October-December) of 2024-25, driven by strong demand and capital expenditure trends, alongside an increase in EBIDTA and corporate GVA reported by Indian companies.
A Bank of Baroda report anticipates India's GDP growth to reach 6.6% in the October-December timeframe, remaining robust due to support from agriculture, government expenditure, and the services sector.
The rise in government capital expenditure (capex) is a critical factor in maintaining economic stability, while the financial sector and rural demand exhibit resilience, as highlighted in the report.
Although the long-term sustainability of GDP relies on income growth, job creation, and private investment, the growth outlook for Q3 FY25 remains optimistic, primarily underpinned by public spending, favorable monsoon conditions leading to increased production of key Kharif crops, and strong performance in the services sector and exports, experts noted.
