Economy likely to have grown 6.4-7.2% in Q4 FY25

Stacks of containers seen inside a container terminal in Kolkata
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SAHIBA CHAWDHARY

The Indian economy is likely to have grown between 6.4 and 7.2 per cent during January-March quarter (Q4) of Fiscal Year 2024-25 (FY25), four key economic research agencies estimated on Wednesday. Growth, based on changes in Gross Domestic Product (GDP), was 6.2 per cent during October-December quarter (Q3) of FY25.

The government will come out with data for Q4 and full fiscal of FY25 on May 30.

Based on projections of different agencies, growth is mainly on account of some improvement in consumption. However, the Q4 number could be lower than the number based on advance estimates given by Statistics Ministry. It may be noted that earlier it was estimated that full-year growth could be 6.5 per cent. Based on the three-quarter numbers, the implied growth rate for Q4 was estimated at 7.6 per cent.

In its research report, SBI said that to estimate GDP statistically, it has built a ‘Nowcasting Model’ with 36 high-frequency indicators associated with industry activity, service activity and global economy. The model uses the dynamic factor model to estimate the common or representative or latent factor of all the high-frequency indicators from Q4 of FY13 to Q2 of FY23. “As per our (SBI) ‘Nowcasting Model’, the forecast GDP growth for Q4 FY25 should come around 6.4-6.5 per cent,” it said. Assuming there are no major revisions in Q1 to Q3, estimates, it estimates full fiscal of FY25 growth at 6.3 per cent.

Morgan Stanley’s report, ‘India Economics Mid-Year Outlook’, noted that India’s growth cycle has been on a gradual cyclical recovery following a partially policy-induced slowdown in 2HCY24. As such, high-frequency data have staged some recovery at the margin, especially from the trough in QE September 2024; however, the trend is not yet broad-based. The report expects growth to be 6.7 per cent at QE (quarter ending) March 2025.

Farm sector

With the same estimates, Nomura sees good growth in the farm sector. “Robust Rabi (winter) crop output should ensure continued strength in the agricultural sector,” it said. While industrial growth is likely to be weaker, a broad-based pick-up in services growth is expected. “On the demand side, we expect a moderation in growth of private consumption, fixed investment and exports, but a sharper contraction in import growth should mean a positive contribution from net exports to overall GDP growth,” it said.

Though Barclays has questioned data in India, it expects a higher growth rate than the others. In a report, it said estimates of GDP in an India context are becoming increasingly challenging due to issues such as incomplete proxy data and sizable revisions. With Q4 FY24-25 data set to be released by month-end, it believes these complicating factors are set to make a comeback. The firm has projected growth rate at 7.2 per cent.

“Given a sharp 30 per cent y-o-y increase in net indirect taxes (nominal) in the January-March quarter, we expect the gap between real GDP and GVA growth to widen again, reflecting different realities. Accordingly, we estimate FY24-25 real GVA (Gross Value Added) growth will average 6.2 per cent, and real GDP growth average 6.4 per cent,” it said.

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Published on May 21, 2025