A pickup in exports during the April 2024 – January 2025 period, a revival of central capital expenditure in January, and mega consumption spending during the Maha Kumbh are all set to provide a fillip to the economy in the fourth quarter of the current financial year, taking the overall FY25 GDP growth rate to 6.5%, Chief Economic Advisor V. Anantha Nageswaran said today.

The Ministry of Statistics today released the GDP numbers for the third quarter (October – December) and the second advance estimates for the current fiscal. “Real GDP is estimated to grow by 6.2% in Q3 of FY 2024-25. The growth rate of real GDP for Q2 of FY 2024-25 has been revised upward to 5.6%,” the ministry said in a release, adding that real GDP is estimated to grow by 6.5% in FY 2024-25.

Since the country recorded 6.6% GDP growth in Q1 FY25, the current set of numbers implies that the economy will have to log a 7.6% growth rate in the fourth quarter of the current financial year, which may be on the higher side considering the lag in the previous quarters. “The GDP data released by the Ministry of Statistics today augurs well for the growth outlook for FY26 and beyond. GDP growth has rebounded in both the first and second quarters, and GDP numbers have been revised slightly higher,” Nageswaran said.

“For the third quarter, the Ministry of Statistics has estimated 6.2% GDP growth. One may try to figure out how we arrived at 6.5%, as it requires an annual growth of 7.6% in Q4 compared to Q4 of FY24. From an average growth performance of 6% in the first three quarters, achieving 6.5% requires a Q4 growth rate of around 7.6%,” Nageswaran said.

However, he pointed to three factors expected to propel growth in the fourth quarter. “The first is the strong performance of exports, particularly merchandise exports—excluding petroleum, gems, and jewellery—which have been growing at an almost 10% rate for the entire April to January period,” he noted.

“The second indicator is the Union government’s capital expenditure. Capital expenditure for the current financial year, up to the end of January, is very much in line with the expenditure incurred in the previous financial year. Almost 75% has been spent as of the end of January. After an initial slow start due to the elections, capex has picked up significantly in Q3 and is continuing into the fourth quarter,” Nageswaran said.

“The third factor that makes a 7.6% growth rate realistic is the massive spending that has taken place in January and is spilling into February at the Maha Kumbh, where fifty to sixty crore people have visited and spent additional sums of money. This could significantly contribute to GDP from the expenditure side. In that sense, the implied 7.6% growth in the fourth quarter does not seem unrealistic,” Nageswaran added.