Rural demand was instrumental in spearheading GDP expansion during October to December
India's GDP Growth Eases Year-on-Year, but Improves Quarterly latest news: India's National Statistics Office (NSO) recently released the latest quarterly GDP reading for October-December, with a 6.2% growth rate. Although this represents a deceleration from the previous year's 8.6% growth, it is an improvement on the last quarter's 5.4% growth.
For the same quarter, nominal GDP growth was estimated to be 9.9%. In the future, the real GDP growth rate is expected by the government to be 6.5% in the financial year 2024-25.
For the entire financial year 2023-24, India recorded a real GDP growth rate of 9.2%, which was the highest annual growth of 12 years, except for the post-pandemic recovery in 2021-22. The real GDP growth rate in 2024-25 is placed at 6.5%.
Rural Demand and Farming Production: Rural demand was instrumental in spearheading GDP expansion during October to December. Good monsoon elevated farm production, which saw output of key Kharif crops rising and lifting rural incomes. Therefore, agricultural growth is poised to increase to 4.5% during Q3 FY25, an improvement from 0.4% in Q3 last year.
Economic Outlook: India's GDP growth has weakened over the last few months, with the economy growing 5.4% in the July-September quarter of 2024, the weakest in almost two years. A deceleration in manufacturing, mining, and consumer expenditure was behind the weaker growth. But the economy is likely to hold a similar growth trajectory in the forthcoming fiscal year.
Prior reports indicated that economic growth in India accelerated in the third quarter of the financial year on account of stronger rural consumption after a good monsoon and a sharp pick-up in government expenditure, which had been affected previously during 2024 because of a multi-phase parliamentary election.
India, the third-largest economy in Asia, earlier experienced a sudden slowdown in growth in the July-September quarter, with GDP growth declining to 5.4%—the lowest rate in seven quarters. Economists attributed the slowdown to sluggish urban demand and a lag in government expenditure. The Reserve Bank of India (RBI) had previously pegged the September-December GDP growth rate at 6.8%.
Future Projections: The recent GDP numbers can be expected to further enhance with the government announcing new initiatives in Union Budget 2025, such as relief on personal income tax. These initiatives can be expected to support consumer spending and drive economic growth in the next few months.
India's economic journey remains a combination of challenges and opportunities, with rural demand and government policies being key drivers in charting its growth pattern.
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