On 28th February, India's economy grew by 6.2% in the October-December quarter of the current financial year, up from 5.6% (revised) in the previous quarter. However, revisions to past data have left economists confused, raising concerns about the accuracy of the statistics.
The Ministry of Statistics and Programme Implementation's second advanced estimate forecasts a 6.5% GDP growth rate for the current financial year, up from 6.4% in the first advance estimate of January. The average GDP growth for the first three quarters of the current financial year stands at 6.1%, and to meet the full-year growth target of 6.5%, a 7.6% growth is needed in the fourth quarter. However, economists suggest that achieving this target may be challenging.
In addition to the growth forecast for FY 2025, the Ministry has revised the growth rate for FY 2023 from 7% to 7.6%, while the estimate for FY 2024 has been increased from 8.2% to 9.2%. The nominal GDP for FY 2025 is expected to be ₹331 lakh crore, reflecting a 9.9% growth, up from a previous estimate of 9.7%. This estimate could help the government keep the fiscal deficit for FY 2025 within 4.8% of GDP.
HDFC Bank's Chief Economist Sakshi Gupta said, "Further revisions may see a reduction in the full-year estimate. We expect 6.8% GDP growth in the fourth quarter of FY 2025 (Jan-Mar 2025). While economic activity in Q3 FY 2025 showed some improvement, it remains modest. As a result, the Reserve Bank of India may cut the repo rate by 25 basis points in April to support growth."
The agriculture sector showed remarkable growth of 5.6% in Q3, while the manufacturing sector continued to lag, growing by only 3.5%. The construction sector's growth rate slowed to 7%, down from 8.7% in the previous quarter. On the positive side, the services sector performed well with a growth rate of 7.4% in Q3.
India Ratings' economist Paras Jasraai noted that consumption demand is broadening among the lower-income groups, evident from the real increase in rural wages in agriculture. This remains positive for FY 2025's third quarter. He also mentioned that FMCG companies' quarterly results indicate a continuous improvement in rural demand, which is favorable for both consumption and GDP growth.
Fiscal Deficit Reaches 74.5% of Full-Year Target
The fiscal deficit for the central government reached 74.5% of its full-year target by January 2025. Official data released on Friday showed this figure. According to the Controller General of Accounts (CGA), the fiscal deficit during the period from April to January 2024-25 stood at ₹11.69 lakh crore. This is 63.6% of the revised estimate for FY 2023-24 during the same period last year. For the current financial year, the fiscal deficit is estimated at ₹15.69 lakh crore. The fiscal deficit represents the gap between the government's total expenditure and revenue, indicating the total borrowing requirement of the government.