- India’s GDP growth accelerated to 6.2% in Q3 FY25, up from 5.4% in the previous quarter.
- Growth was driven by improved rural consumption and higher government expenditure.
- Challenges include subdued urban demand and potential trade uncertainties.
India’s economy showed resilience in the December quarter, with GDP growth reaching 6.2%, supported by a strong rural recovery and increased government spending.
Despite the positive trend, concerns persist regarding global trade uncertainties, particularly potential U.S. tariffs under a Trump administration.
India’s Economy Expands in Q3 FY25, But Challenges Remain
The Indian economy grew at 6.2% in Q3 FY25, marking an improvement from the previous quarter. Sectors such as construction, financial services, and trade saw strong expansion, contributing to overall GDP growth. Meanwhile, fiscal data shows that the government remains committed to reducing the fiscal deficit to 4.8% of GDP.
While the rural economy rebounded due to a good monsoon, urban consumption remained sluggish, tempering the overall growth outlook. The services sector, a key contributor to India’s GDP, showed steady expansion, but concerns over high inflation and global headwinds persist.
Economists have pointed out that while year-end festive demand provided a boost, uneven private consumption remains a concern. The RBI recently revised its growth forecast for FY25 to 6.6%, slightly lower than previous estimates, reflecting a cautious outlook.
With trade uncertainties on the horizon, especially concerning global supply chain shifts and potential tariff adjustments, India’s export sector could face headwinds. Policymakers will need to balance growth-focused reforms with macroeconomic stability to ensure continued momentum.
India’s GDP growth in Q3 FY25 signals a recovery, but sustaining this momentum will require addressing domestic demand issues and navigating global trade uncertainties.
“Growth is never by mere chance; it is the result of forces working together.” – James Cash Penney
