India’s GDP growth hits 6.2% in Q3FY25 amid sectoral slowdowns and global trade risks. Read key data insights, inflation trends, and policy concerns.
Economic Growth Overview
- India’s real GDP growth in Q3FY25 (December quarter) reached 6.2%, up from a revised 5.6% (originally 5.4%) in Q2FY25.
- This marks the slowest growth since Q4FY23, except for the previous quarter’s 5.6%.
- The 6.5% full-year growth target set by the government is nearly unattainable due to global tariff-related challenges and domestic manufacturing and services sector slowdown.
- Global headwinds, including potential imported inflation from tariffs, pose risks to economic stability.
Sectoral Performance
- Primary Sector: Strong growth at 5.2% value-add, up from 1.8% in Q3FY24, significantly boosting overall GDP.
- Secondary Sector (Manufacturing): Growth slowed to 4.8% from 12.4% in Q3FY24, reflecting vulnerabilities.
- Tertiary Sector (Services): Growth moderated to 7.4% from 8.3% in Q3FY24, indicating a slowdown.
- Manufacturing and services sectors face challenges from global trade uncertainties, including U.S. tariffs.
Global Trade Challenges
- U.S. Tariffs: A 25% import tariff on steel and a proposed 25% tariff on pharmaceuticals threaten India’s exports.
- Pharma Exports: In FY24, 31% of India’s $8.7 billion pharma exports went to the U.S.
- Some Indian firms are considering shifting production to the U.S., which could lead to a trade revenue loss for India.
Bright Spots
- Government Spending: Increased by 8.3% in Q3FY25, up from 2.3% in the previous quarter.
- Private Consumption Expenditure: Grew by 6.9%, up from 5.7%, supported by moderating inflation.
- Inflation Projections:
- RBI estimates inflation at 4.8% for FY25, expected to ease to 4.2% in FY26, nearing the 4% medium-term target.
- Maha Kumbh Impact: Potential consumption spike from the event could support Q4FY25 growth, though achieving 7.6% growth (as suggested by Chief Economic Adviser V. Anantha Nageswaran) remains ambitious.
Data Methodology Concerns
- National Statistical Office (NSO): Revised its methodology by incorporating “industry-wise/institution-wise detailed information.”
- Lack of Clarity: NSO has not fully explained the material impact of these changes on data quality and quantity.
- Benchmark Revisions: Variations in advanced estimates attributed to updated benchmarks and additional data.
- Call for Transparency: NSO must clarify methodology changes to enable informed analysis of economic data.
Source - The Hinduhttps://www.thehindu.com/opinion/editorial/battle-for-growth-on-indias-economic-trajectory/article69286198.ece