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Indian economy recovered in the December quarter to grow at 6.2%.

News in Details

The Indian economy recovered in the December quarter (Q3 FY25), growing at 6.2%, up from a seven-quarter low of 5.6% in Q2 FY25, according to the second advance estimates released by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).

Key Drivers of Q3 Growth

Private and Government Consumption

• Private final consumption expenditure (PFCE) grew by 6.9% YoY in Q3, up from 5.7% in Q3 FY24.
• Government spending surged by 8.3% YoY, compared to 2.3% in the same quarter last year.
• These increases offset the slowdown in investment growth, which fell to 5.7% in Q3 from 9.3% a year earlier.

Net Exports

• Exports rose by 10.4% YoY in Q3, a sharp improvement from 3% growth in Q3 FY24. Imports contracted by 1.1%, entering negative territory. This narrower drag on net exports contributed to the growth uptick .

Sectoral Performance

• Agriculture: Grew at 5.6% in Q3, a six-quarter high, compared to 4.1% in Q2. This was driven by favorable monsoon conditions.
• Manufacturing: Improved to 3.5% from 2.1% in Q2 but remained weak compared to 12.4% in Q3 FY24.
• Construction: Slowed to 7% from 8.7% in Q2.
• Services: Grew at 7.4%, up from 7.2% in Q2, led by public administration and defense .

Investment Concerns

• Fixed Capital Formation: Slowed to 6% in FY25 from 9.8% in FY24, with the investment rate hitting a four-year low of 29.5%.
• Government Capex: As of January, only 74.4% of the revised Rs 10.2 lakh crore capex target had been utilized. This muted capital formation is a key risk to sustained growth.

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Source:

INDIAN EXPRESS

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