India's Economic Growth in Q3FY25
India's economy experienced a 6.2% real GDP growth rate in Q3FY25. This was an improvement over the revised estimate of 5.6% in the previous quarter, yet it was the slowest growth since Q4FY23, except for the last quarter's performance.
Challenges to Growth
- The government's full-year growth target of 6.5% is likely unattainable due to:
- Global economic headwinds.
- Tariffs potentially causing imported inflation.
- Tepid performance in manufacturing and services sectors domestically.
Sectoral Performance
- Primary Sector: Growth bolstered by a value-add increase to 5.2% from 1.8% last year.
- Secondary Sector (Manufacturing): Growth slowed to 4.8% from 12.4% last year.
- Tertiary Sector (Services): Growth decelerated to 7.4% from 8.3% last year.
Global Trade Uncertainties
- Vulnerabilities include:
- U.S. 25% import tariff on steel and proposed similar tariff on pharmaceuticals.
- 31% of India's $8.7 billion pharma exports went to the U.S. in FY24.
- Potential trade revenue loss as firms consider producing in the U.S.
Positive Economic Indicators
- Government Spending: Increased by 8.3%.
- Private Consumption Expenditure: Grew by 6.9%.
- Inflation moderation projected by the RBI:
- 4.8% average in FY25.
- Expected to ease further to 4.2% in FY26.
Methodological Revisions by NSO
The National Statistical Office (NSO) has adjusted its methodology, incorporating "industry-wise/institution-wise detailed information." However, the impact on data quality and quantity remains unclear. The NSO noted that variations are due to revised benchmark estimates and updated data.
