India’s GDP Growth Set to Rise to 6.2% in Q3FY25, Says Union Bank of India Report
New Delhi – India’s economy is showing signs of a rebound, with GDP growth expected to climb to 6.2% in the third quarter of the financial year 2024-25 (Q3FY25), up from 5.4% in the previous quarter (Q2FY25). This positive outlook comes from a recent report by Union Bank of India, released on February 22, 2025, offering hope after a sluggish period earlier this year.
The report suggests that India’s economic growth is gaining momentum. The second quarter (July-September 2024) saw GDP growth drop to a seven-quarter low of 5.4%, raising concerns among experts. However, Union Bank of India predicts a recovery in Q3 (October-December 2024), driven by stronger economic activity. Official GDP figures for this period will be released by the government on February 28, 2025, giving a clearer view of the nation’s progress.
One key factor behind this uptick is the narrowing gap between GDP (Gross Domestic Product) and GVA (Gross Value Added). In the first half of FY25 (April-September 2024), this gap was negative, meaning GVA grew faster than GDP. The bank’s report notes, “We estimate Q3FY25 GDP growth rate to mark an uptick to 6.2%, as the negative gap between GDP and GVA growth observed in H1-FY25 probably became neutral.” Simply put, the economy is balancing out, which could signal healthier growth ahead.
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Not everything is smooth sailing, though. The report flags a worrying trend in net indirect taxes—like GST and other levies. While GDP data relies on these taxes to reflect growth, fiscal data shows their growth slowing down in Q3FY25. This “disconnect” could keep the GDP-GVA gap negative, posing a risk to the 6.2% projection. Analysts will be watching closely to see how this plays out when the official numbers drop.
Despite these challenges, Union Bank of India remains confident in its full-year GDP growth forecast of 6.4% for FY25 (April 2024-March 2025). To hit this target, the economy needs to grow at 6.8% in the second half (October 2024-March 2025), compared to 6% in the first half. This aligns with other projections, like the Ministry of Statistics’ January 2025 estimate of 6.4%, though it’s lower than the 8.2% growth seen in FY24.
The report also highlights a wildcard: data revisions. In the past, GDP estimates have shifted significantly after updates. For example, in February 2024, Q3FY24’s GDP was revised upward due to tweaks in earlier quarters’ numbers. The bank suggests there’s an “upward risk” to the 6.2% Q3FY25 estimate if last year’s figures are adjusted downward. This trend could push the final growth rate even higher.
What’s Next for India’s Economy?
The upcoming GDP data release on February 28 will include not just Q3FY25 numbers but also the second advance estimate for the full FY25 year. This will shed light on whether India can sustain its growth momentum. Economists are cautiously optimistic, noting that government spending, rural demand, and service exports could drive the economy forward. However, risks like weak urban consumption and global uncertainties remain.
