The government remains confident about the growth prospects and a renewal of economic growth dynamics in the fourth quarter of the 2024-25 financial year as well as in the next budget despite the continuous external uncertainties and expects a complete renewal of domestic urban demand and strong rural demand.
According to anticipated national income estimates published on Friday, the economy of India would increase by 6.5% during the 2010 financial year, which is a little better than the first advanced estimates that set GDP growth to 6.4%. GDP is expected to increase to 6.2% in the third quarter of the financial year and the growth estimate for the second quarter of the financial year was revised at 5.8% compared to the previous 5.4%. However, the growth of the first quarter was revised downwards 20 BPS to 6.5% compared to the previous estimate of 6.7%.
Analysts noted that, taking into account the current estimates, GDP growth in the fourth quarter of the financial year should be 7.6%, many calling it a little too optimistic.
However, the chief economic adviser against Annantha Nageswaran stressed that there was wide growth in the third quarter of domestic demand and domestic exports and this should continue to move forward.
“Despite the prospects for uncertain growth, India’s economic time should be supported by strong rural demand and a revival of urban consumption,” he told journalists at the publication of data. A robust production of Kharif and a better sowing of Rabi, associated with higher reservoir levels and a seasonal winter correction of vegetable prices, augur well for food inflation in the future, he also noted.
The tax reductions announced in the Union 2025-26 budget for the middle class will contribute to the overall demand, he noted. In addition, the growth of GDP of the fourth quarter would also be helped by higher private final consumer expenses due to the trips and expenses linked to the Maha Kumbh where millions of Indians have gone. Although it said it would be difficult to quantify the impact of this, the CEA noted that it will have a “considerable impact on consumer spending in the fourth quarter of the financial year”.
The growth in final consumption is estimated at 6.9% in the third quarter of the budget compared to 5.9% in the second quarter, while final consumption expenses of the government reached a top of five quarters of 8.3% in the third quarter of the financial year, against 3.8% in the previous quarter.
However, most analysts expect GDP growth to be lower than the implicit estimate of 7.6% in the fourth quarter of the financial year. “.. GDP is implicitly estimated at the growth of 7.6% in the fourth quarter FY2025. We believe that this is slightly higher given the global uncertainties surrounding the exports of goods and the prices of raw materials, which would affect corporate margins, as well as moderate prints for sectors such as electricity and coal for January 2025, “said Aditi Nayar, chief economist, chief – research and outchingu.
The agency expects the growth of GDP of the fourth quarter to print approximately 6.5 to 6.9%, led by public spending and rural consumption. Consequently, for the 201025 financial year, we expect GDP growth to 6.3% against the second prior estimate of 6.5%, she noted.
Paras Jasrai, senior economic analyst at India Ratings and Research said that the possibility of achieving growth of 7% more in 4qfy25 seems difficult, in particular at the first time which was spoiled by renewed geopolitical risks which could maintain the demand for investment by private players and in waiting mode. “The new positive has been moderating inflation, which should decrease to 4.5% in 4qfy25. This would give a boost to real wages and therefore to the demand for consumption, “he noted.
However, Rajani Sinha, chief economist, Careedge, said that the agency expects GDP growth of approximately 7% in the fourth quarter and 6.7% for financial year 26. “Factors such as recovery of rural demand, the drop in tax burden, decreases in policy rate, the decrease in food inflation and the resumption of expenditure in public capital should support economic. Festivities in the midst of Maha-Kumbh celebrations in the fourth quarter should also support the demand for consumption and sectors such as trade, hotel and transport, “she said, adding that a lasting consumption recovery will be essential to generate a significant increase in CAPEX. However, the increase in the uncertainty of global policy, in particular on the commercial front, geopolitical tensions and weather events, remains a key supervisor, she also said.
Nageswaran also stressed that short -term global economic prospects are influenced by the major economist’s trade policies in the midst of slowed off. “These policies can fuel inflation, lead to stricter financial conditions and increase volatility,” he warned.
Other challenges include developments such as the strength of the US dollar and the increase in Japanese interest rates that could exacerbate the capital outings of emerging markets, increase risk premiums and increase external risks, he said.
