India's GDP expands by 6.2% in Q3; FY25 growth forecast revised to 6.5%

The real GDP (GDP) growth in the 3rd quarter Q3 GDP of the fiscal period 2024-25 (FY25) was 6.2 percent according to figures released with the National Statistics Office (NSO). The increase comes after the growth in GDP fell to the lowest level of 5.4 percent in Q2FY25. This is significantly lower than estimates.

The construction sector saw the fastest growth rate at 8.6 percent, then followed by real estate, financial and professional services at 7.2 percent, and transport, trade, hotels and communications as well as broadcasting-related services, at 6.4 percent.

The private final consumption expenditure was up 7.6 percent, indicating an increase in spending by consumers.

This is why the government has lowered its real India GDP growth projections in FY25 down to 6.5 percent from 6.4 percent.

The gradual slowdown in the growth of the economy is evident in recent quarters. The growth rate further slowed to 6.7 percent in Q1FY25 before dropping to 5.4 percent in Q2FY25. It took a lot of Indians by surprise. They hadn't thought of such a dramatic slowdown.

Forecasts of inflation and GDP for FY26

The Reserve Bank of India (RBI) has fixed an annual rate of growth at 6.6 percent in the fiscal that ends March 2025.

Despite a lukewarm beginning of FY25, the ministry expects a rebound in economic activity during the second portion in the calendar year. A rise in the production of industrial and agricultural products and a robust demand from rural areas is expected to help the growth of India. This could assist the country's economy in achieving growth of 6.4-6.8 percent at the end of the fiscal year.

The RBI has set the growth of GDP data for FY26 to 6.7 percent, and the following estimates for quarterly growth:

• Q1FY26: 6.7 per cent (revised from 6.9 per cent)
• Q2FY26: 7 percent (revised from 7.3 percent)
• Q3FY26: 6.5 per cent
• Q4FY26: 6.5 per cent