India's GDP Needs 7% Growth in Q4 for 6.5% Annual Target: Experts

New Delhi, Feb 28 (PTI) A high growth rate of over 7 per cent is needed in the January-March quarter to achieve the upwardly revised GDP growth projection of 6.5 per cent in the current financial year, opined experts.

India's economic growth rate decelerated to 6.2 per cent in the October-December quarter this fiscal, mainly due to poor performance by mining, manufacturing and all other sectors, with the exception of agriculture.

According to the second advance estimate for the current fiscal released by the National Statistics Office (NSO), the growth rate in real GDP during 2024-25 is estimated at 6.5 per cent, up from the initial projection of 6.4 per cent.

Upward revision of the annual growth to 6.5 per cent for the full financial year 2024-25 shows the resilience of the Indian economy even in the face of headwinds, said industry body Assocham.

Assocham president Sanjay Nayar said that while the Indian economy is maintaining the status of growing at the fastest rate amongst the major economies of the world, the country is not insulated from the new global challenges like the tariff war and its impact on the cross-border supply chain.

"The way forward should be the next generation of reforms both at the Centre and in the states to ensure that we return to the 7 per cent and above growth trajectory even as we need to devise measures to navigate the emerging new world economic order," he said.

Paras Jasrai, senior economic analyst at India Ratings and Research said with the lower-than-expected growth in 3QFY25, growth in 4QFY25 must be 7.6 per cent year-on-year to achieve the estimated 6.5 per cent in the current fiscal.

"The possibility of achieving a 7 per cent plus growth in 4QFY25 looks challenging, especially at the current juncture which has been marred by renewed geopolitical risks which may keep investment demand by private players at bay and in wait-watch mode.

"The positive news has been the moderating inflation, which is expected to decline to 4.5% in 4QFY25. This would provide boost to the real wages and thus the consumption demand," Jasrai added.

ICRA's chief economist, Aditi Nayar said notwithstanding the sequential improvement in India's GDP growth to 6.2 per cent in Q3FY2025 from the revised 5.6 per cent in Q2FY2025, the pace trailed Icra's forecast of 6.4 per cent.

She noted that the sequential uptick was led by a pickup in the growth of private and government consumption and a narrower drag on account of net exports, even as that in gross fixed capital formation eased marginally between these quarters.

"With the next CPI inflation print for February 2025 foreseen at 4 per cent, the Q3FY2025 GDP print of 6.2 per cent suggests a high probability of another rate cut in April 2025. Whether rates are cut for a third time in 2025 would be crucially impacted by the subsequent GDP growth print for Q4FY2025," Nayar added.

Commenting on the data, Rumki Majumdar, economist, Deloitte India said that despite the volatility in the global market during the October-December quarter, exports performed considerably well at 10.4 per cent.

Notably, the third quarter of 2024-25 saw a prominent increase in exports of engineering goods, electronics items, drugs and pharmaceuticals, and inorganic chemicals—the highest-ever exports recorded in history.

"The depreciation in currency against the dollar probably boosted exports. On the other hand, imports have contracted for three subsequent quarters despite currency depreciation," Majumdar said.

Rohit Arora, CEO and co-founder, Biz2Credit and Biz2X said India's economic growth of 6.2 per cent in Q3FY25, alongside an upward revision in full-year GDP estimates, reflects sustained momentum despite a high base effect.

He said digital transformation continues to reshape financial services, particularly lending, where AI-driven underwriting and embedded finance are streamlining credit access, especially for SMEs and MSMEs.

"Going forward, policy stability, infrastructure investment, and evolving trade dynamics will be key to sustaining economic growth and accelerating financial innovation," Arora said.

The NSO has also revised GDP estimates for the first quarter of this fiscal to 6.5 per cent and 5.6 per cent for the second quarter from earlier estimates of 6.7 per cent and 5.4 per cent, respectively.

The economy has expanded 6.1 per cent in April-December 2024 down from 9.5 per cent a year ago.