India’s real GDP growth for FY2024-25 has been revised upward to 6.5% year-on-year (yoy) from the earlier estimate of 6.4%, with third-quarter growth accelerating to 6.2% yoy from 5.6% in the previous quarter, according to the latest official estimates. Growth is expected to further rise to 7.6% in the fourth quarter, driven by improving demand conditions.
India’s economy grew by 6.2 per cent in real GDP terms in Q3 FY25, with nominal GDP rising 9.9 per cent, according to MoSPI data. Upward revisions signal strong momentum, driven by robust construction activity, financial services, and consumer demand. Full-year real GDP growth is now projected at 6.5%.
However, Barclays believes the official estimate may be optimistic, projecting GDP growth at 6.2% for the full year. The brokerage argues that for the official 6.5% growth target to materialize, Q4 GDP would need to expand by 7.6% yoy—an unlikely scenario given mixed signals from high-frequency indicators.
“We think the FY24-25 SAE may be an overestimation: we expect FY24-25 GDP at 6.2%. Arithmetically, for FY24-25 real GDP growth to average at 6.5% y/y, the January-March quarter growth should come in at 7.6% y/y. That looks like a stretch, in our view: so far, we only have data for high-frequency indicators for January, which looks like a mixed bag (growth in sales of two-wheelers, power and fuel consumption has slowed compared with Q4, while sales of passenger vehicles has accelerated). Even if the magnitude of outperformance vs. the median that we saw in the October-December quarter, extends to the January-March quarter, we expect Q4 FY24-25 (Q1 25) GDP growth at 6.7% y/y, translating into FY24-25 real GDP growth at 6.2% y/y,” Barclays India said in a note.
A few days earlier Nomura had estimated that India’s real GDP growth for Q3 FY25 will be 5.8% year-on-year, an improvement from 5.4% in Q2 but still below consensus estimates.
It had expected gross value added (GVA) growth to rise to 6.0% from 5.6%, supported by higher consumption and government spending, while investment is expected to remain stable and net exports will likely contribute negatively.
What SBI Research says
On a sectoral basis, SBI Research highlighted strong performance in agriculture and allied activities, which grew 5.6% in Q3 FY25, supported by a robust Kharif crop and favourable monsoons.
The industrial sector expanded 4.5%, with manufacturing growth at 3.5%, while services remained a key driver, growing 7.4%. However, construction sector growth moderated to 7%.
Private consumption is expected to grow by 7.6% in FY25, improving from 5.6% in the previous year, driven by higher spending on healthcare, education, and hospitality.
Meanwhile, capital formation is likely to slow to 6.1% from 8.8% in FY24, reflecting weaker private investment. SBI Research flagged concerns over a decline in private sector investment from 25.8% of GDP in FY23 to 24.0% in FY24, while public sector investment hit a decade-high 8.0% of GDP.
India’s household savings rate also dipped to a seven-year low of 18.1% of GDP in FY24, mainly due to a decline in savings in physical assets. However, financial inclusion has improved significantly, with over 80% of Indian adults now having a formal financial account, compared to around 50% in 2011.
