India’s Q3 GDP growth to hit 6.3% led by strong demand and capex trends: SBI report

India’s GDP growth for the third quarter (October-December) of FY2024-25 is projected to reach 6.2–6.3%, driven by strong demand, capital expenditure (Capex) trends, and improved financial performance in India Inc., according to a report compiled by SBI economists.

Released on Wednesday, February 19, the SBI report suggests that the dip observed in the second quarter of FY25 is a temporary “blip” and estimates that the full-year GDP growth for FY25 will remain at 6.3%, provided there are no major revisions in the earlier quarters’ data from the National Statistical Office (NSO).

India’s Q3 GDP data release date

Official GDP data for Q3 is expected to be released on February 28. The report highlights that the percentage of economic indicators showing positive acceleration increased to 74% in Q3FY25, compared to 71% in Q2FY25.

A strong rural economy is playing a crucial role in maintaining overall economic stability and supporting momentum in various sectors. Consistent growth in rural agricultural wages, rising domestic tractor sales, and a pickup in rabi crop sowing are key contributors to this stability.

Capex trends also show improvement in Q3 FY25, with many states reducing their Capex as a percentage of Budget Estimates (BE) for FY25 but gaining positive momentum in Q3, suggesting optimistic future growth prospects.

Positive signs from India Inc

The report notes that India’s manufacturing sector, as measured by the Index of Industrial Production (IIP), grew from 3.3% in Q2 FY25 to 4.3% in Q3 FY25. Additionally, India Inc. reported positive EBITDA growth (44 basis points) for the first time in two quarters, while corporate gross value added (GVA) saw significant quarter-on-quarter improvement.

Despite the global economic slowdown, India continues to be one of the fastest-growing economies. The International Monetary Fund (IMF) recently projected India’s growth at 6.5% for both FY25 and FY26, supported by robust domestic demand, strong infrastructure investment, and government policy initiatives.

SBI’s ‘Nowcasting Model’

SBI economists have developed a “Nowcasting Model” to estimate GDP using 36 high-frequency indicators linked to industrial and service activity, as well as global economic factors. The model employs a dynamic factor approach to statistically analyze these indicators from Q4 FY13 to Q1 FY23.

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