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Informist, Friday, Feb. 28, 2025

NEW DELHI – The statistics ministry's second advance estimate of GDP for 2024-25 (Apr-Mar) implies that Indian economy's growth rate will surge to a four-quarter high of 7.6% in Jan-Mar. According to data released on Friday by the Ministry of Statistics and Programme Implementation, India's GDP grew by 6.2% in Oct-Dec, a tad below economists' expectations of 6.3% as per an Informist poll.

With growth for the first three quarters of FY25 estimated at 6.1% and the second advance estimate for full-year growth pegged at 6.5%, calculations show that the implied growth rate for Jan-Mar is a massive 7.6%. According to Madhavi Arora, chief economist at Emkay Global Financial Services, this is a "tall ask given the current macro dynamics" and will keep the Reserve Bank of India "on its toes to support growth amidst evolving global order".

Arora's view was echoed by Aditi Nayar, ICRA's chief economist, who warned of the risks posed by global uncertainties surrounding merchandise exports and commodity prices, which would affect corporate margins. Nayar currently expects GDP growth in the final quarter of FY25 to come in at 6.5-6.9%, led by government spending and rural consumption. As a result, full-year GDP growth may miss the second advance estimate by 20 basis points or so, Nayar said.

Speaking to reporters after the release of the GDP data, Chief Economic Adviser V. Anantha Nageswaran defended the implied growth figure for Jan-Mar, pointing towards robust capital expenditure by the government and good tourism. Data released earlier in the day showed that the Centre's capital expenditure jumped 51% in January to INR 720.22 billion. To meet its revised capex target of INR 10.18 trillion for FY25, the Centre must invest at least INR 1.31 trillion in both February and March.

Earlier this month, the RBI's Monetary Policy Committee cut the repo rate by 25 bps to 6.25% following the sharp fall in growth in Jul-Sept to 5.4%, which was on Friday revised upwards to 5.6%. However, the minutes of the MPC's meeting showed members of the committee were rather concerned about growth, with RBI Executive Director Rajiv Ranjan saying the time had come "to accord higher weight to growth in our policy setting". The MPC is scheduled to next meet Apr. 7-9, when it is widely expected to announce another repo rate cut.  End

Reported by Siddharth Upasani

Edited by Tanima Banerjee

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