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Informist, Wednesday, Aug. 13, 2025

 

NEW DELHI – India's GDP growth likely moderated to 6.8% in the June quarter from 7.4% in Jan-Mar, BofA Securities said in a research report Wednesday. However, the gap between GDP growth and the growth in gross-value added is expected to remain large, BofA said. 

 

Gross-value added growth is expected to be around 6.4% in the June quarter compared with 6.8% in the previous quarter, given lower subsidy payouts and higher taxes, the report said. "From the expenditure perspective, growth in household consumption is likely to be supported particularly aided by a second year of good monsoon augmenting rural demand, while investment growth also rebounds given higher public spending, and improvement in capital goods IP (industrial production)," the report said.

 

The reduction in interest rates by the Reserve Bank of India's Monetary Policy Committee and tax cuts announced in the Union Budget in February also supported growth in Apr-Jun, which should mitigate the negative impact of uncertainties around tariffs and the India-US trade deal, the report by BofA economists Rahul Bajoria and Smriti Mehra said.

 

Agriculture growth likely remained steady at 5.5% in the June quarter compared with 5.4% in the previous quarter and 1.5% a year ago, thanks to a good monsoon and robust sowing activity, BofA said. "Mining, however, remained weak due to early monsoon, which in turn weighed on power demand, resulting in a sharp drop in coal demand," it added. Manufacturing also slowed in Apr-Jun because of weakness in the auto sector, the report said.

 

Bajoria and Mehra expect GDP to grow 6.5% in the current financial year, at the same pace as projected by the RBI. "We believe the RBI would prioritise financial stability, and while it manages downside growth risks, we do not see the RBI being reactive, given the ongoing uncertainty of discussions," the report said.  End

 

Reported by Shubham Rana

Edited by Tanima Banerjee

 

 

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