New Delhi [India], March 3 : India's economy is expected to grow at a much better pace in the fourth quarter of FY25, supported by strong government spending, a recovery in the rural economy, and a likely increase in private investment, according to a report by Centrum.
The report projects GDP growth for FY25 at 6.5 per cent, with rate cut by the Reserve Bank of India (RBI) expected to aid economic recovery in the coming quarter.
It said "GDP growth for FY25 is projected at 6.5 per cent as the economy is expected to grow at a much better pace in Q4. Strong capital spending by the government, recovery in the rural economy, likely pick-up in private investment and further rate cuts by RBI could aid recovery in the coming quarters".
The Indian economy expanded at a faster rate of 6.2 per cent in Q3FY25, compared to 5.58 per cent in Q2FY25.
However, the growth rate was slightly below expectations, which were pegged at 6.3 per cent.
One of the key drivers of this growth has been private consumption expenditure, which recorded a 6.9 per cent rise in Q3FY25. This marks an increase of 122 basis points compared to Q3FY24 and a 102 basis points rise over Q2FY25.
The data indicates that consumption demand is picking up, supported by an improving rural economy.
However, the report highlighted concerns about a slowdown in urban demand, as reflected in Q3 corporate earnings. This remains a challenge for economic growth in the coming quarters.
Meanwhile, large-scale spending during the Maha Kumbh event could have a positive impact on consumption demand, further supporting the economy.
The report said "A likely impact in consumption demand due to the spending done during the Maha-Kumbh could also bode well for growth outlook".
Despite the optimistic outlook, the report also pointed out key risks such as global trade uncertainties, geopolitical tensions, and the ongoing tariff war. These factors could pose challenges for India's economic growth.
Looking ahead, continued recovery in the rural economy, increased government spending, and further rate cuts by the RBI are expected to support economic expansion. If these factors align well, India could witness stronger growth momentum in the fourth quarter and beyond.
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