India’s Q3 GDP Growth Estimated at 6.2-6.3%, Driven by Strong Demand: SBI Report

India’s GDP growth for the third quarter (October-December) of FY2024-25 is projected to reach 6.2–6.3%, supported by strong demand, improving capital expenditure (Capex) trends, and a better financial performance from India Inc., according to a report by SBI economists. The report, released on February 19, suggests that the decline observed in the second quarter of FY25 was only a temporary "blip" and estimates full-year GDP growth to remain at 6.3%, provided there are no major revisions to earlier quarters’ data by the National Statistical Office (NSO).

The official GDP data for Q3 is set to be released on February 28. The report highlights that 74% of key economic indicators showed positive acceleration in Q3 FY25, up from 71% in the previous quarter, signaling an improvement in economic momentum. A strong rural economy has played a crucial role in sustaining this growth, with rising rural wages, increased tractor sales, and an uptick in rabi crop sowing contributing to overall stability.
Capex trends have also shown positive movement, with many states witnessing improved expenditure momentum in Q3 after a slowdown in earlier months. This indicates strong future growth prospects, aligning with government efforts to boost infrastructure and economic activity.

India’s manufacturing sector has also recorded steady growth, with the Index of Industrial Production (IIP) rising from 3.3% in Q2 FY25 to 4.3% in Q3 FY25. Corporate financial performance has shown improvement, with India Inc. reporting positive EBITDA growth for the first time in two quarters, alongside a significant quarter-on-quarter rise in corporate gross value added (GVA).

Despite global economic challenges, India remains one of the fastest-growing economies. The International Monetary Fund (IMF) recently projected India's GDP growth at 6.5% for both FY25 and FY26, citing strong domestic demand, infrastructure investments, and government policy measures as key drivers of resilience.

SBI economists have utilized a "Nowcasting Model" to estimate GDP trends, analyzing 36 high-frequency indicators related to industrial and service activities along with global economic factors. This model, using data from Q4 FY13 to Q1 FY23, employs a dynamic factor approach to provide real-time economic assessments.