India’s economy registered a growth rate of 6.2% in the third quarter of the financial year 2024-25, as per the latest data released by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI). The nominal GDP growth rate for the same quarter has been estimated at 9.9%, reflecting a steady expansion in economic activity despite ongoing global challenges. The revised data also indicated that real GDP growth for the second quarter of FY 2024-25 was adjusted upward to 5.6%, suggesting that the economy is performing better than earlier projections had indicated.
For the full financial year 2023-24, India recorded an impressive real GDP growth rate of 9.2%, marking the highest annual expansion in the past 12 years, excluding the post-pandemic rebound witnessed in 2021-22. The government now projects that for the entire financial year 2024-25, GDP will expand by 6.5%, slightly above the previous estimate of 6.4%. However, even with this upward revision, the projected growth rate would still be the slowest in four years. The slowdown reflects both domestic and international economic challenges, including sluggish global trade, geopolitical tensions, inflationary pressures, and tightening monetary policies by central banks worldwide.
A significant contributor to economic growth in the October-December quarter was a surge in rural demand, driven by a favourable monsoon season that boosted agricultural productivity. Improved yields in major Kharif crops, such as rice, maize, and pulses, resulted in higher rural incomes, which in turn fueled consumption. As a result, the agriculture sector is projected to have expanded by 4.5% in Q3 FY25, a remarkable improvement from the mere 0.4% recorded in the same period last year. This sharp rise underscores the crucial role that agriculture continues to play in India’s economic landscape, especially in supporting rural livelihoods and demand.
Apart from agriculture, industrial output and services also contributed to overall economic growth. The manufacturing sector saw a moderate pickup in activity, supported by increased domestic demand and stable commodity prices. However, weak external demand due to global trade uncertainties weighed on India’s export performance, limiting the pace of expansion in industrial output. Meanwhile, the services sector, which accounts for more than 50% of India’s GDP, continued to demonstrate resilience, driven by robust demand in financial services, IT, retail, and hospitality.
Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, analyzed the latest GDP figures, stating that while upward revisions to past GDP data indicate strength in economic fundamentals, the FY25 figures remain relatively stable, primarily due to improved second-quarter estimates. She further noted that the Q3 FY25 GDP growth rate of 6.2% was broadly in line with market expectations. However, Bhardwaj expressed skepticism regarding the Central Statistics Office’s (CSO) implied fourth-quarter GDP growth projection of around 7.5%, calling it "significantly optimistic." She anticipates that the final GDP growth figure for FY25 will likely be 20-30 basis points lower than the CSO’s estimate. Looking ahead, she forecasts that India’s GDP growth in FY26 will be approximately 6.4%, though she cautioned that downside risks persist, particularly due to global trade uncertainties, volatility in crude oil prices, and potential shifts in monetary policy by major central banks.
Despite these concerns, India remains one of the world’s fastest-growing major economies, supported by strong domestic demand, government-led infrastructure spending, and sustained industrial and services sector activity. However, inflationary pressures, uncertainty over global interest rate movements, and geopolitical tensions could impact economic growth in the coming quarters. Policymakers are expected to closely monitor these factors while formulating strategies to sustain growth momentum and ensure economic stability.
Going forward, key areas to watch include private sector investment trends, government spending patterns, export competitiveness, and the Reserve Bank of India’s monetary policy stance. With elections on the horizon, fiscal policies and economic stimulus measures may also play a role in shaping India’s growth trajectory in the upcoming quarters. Investors, businesses, and consumers alike will be closely watching economic indicators to assess the resilience and direction of the Indian economy in the near future.
