Government spending, rural boom lift India’s GDP to 6.2% in Q3 FY25

India's GDP growth accelerated to 6.2% in the third quarter (Q3) of fiscal year 2024-25, ending December 2024. This marks an improvement from the 5.4% growth recorded in the previous quarter (Q2 FY25).

Real GDP at constant prices for Q3 FY25 is estimated at Rs 47.17 lakh crore, compared to Rs 44.44 lakh crore in Q3 FY24. Gross Value Added (GVA) also grew by 6.2% year-on-year, while nominal GDP growth, which factors in inflation, stood at 9.9%.

The growth rebound is attributed to improved rural demand following a good monsoon, increased government spending on infrastructure, and a revival in consumer-centric sectors during the festive season. However, the 6.2% growth remains lower than the 8.6% recorded in the same quarter last year.

For the full fiscal year 2024-25, the government now projects GDP growth at 6.5%, slightly higher than the earlier estimate of 6.4%. However, this would still mark the lowest growth rate in four years.

Rural demand played a significant role in boosting GDP growth during the October-December period. Favorable monsoons led to improved agricultural output, with major Kharif crops showing higher production, contributing to increased rural incomes. Agriculture growth is expected to accelerate to 4.5% in Q3 FY25, compared to just 0.4% in Q3 FY24.