'Resilient economy': IMF lauds India’s macro policies as Q3 GDP growth rebounds to 6.2%

India’s prudent macroeconomic policies and reforms have contributed to making the economy resilient and the fastest growing major economy, which are essential to achieve its ambition of becoming an advanced economy by 2047, the International Monetary Fund (IMF) has said in its report after the Article IV consultations with India. The report comes amid the government data showing that India's economy regained momentum in the December quarter, with its GDP growing at 6.2%, after slipping to a seven-quarter low of 5.6% in the preceding July-September period.

"Real GDP is expected to grow at 6.5 percent in 2024/25 and 2025/26, supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability. Headline inflation is expected to converge to target as food price shocks wane," the IMF report added.

India's current account is expected to widen somewhat but remain moderate at -1.3 percent of GDP in 2025/26, said the global financial agency. "Looking ahead, India’s financial sector health, strengthened corporate balance sheets, and strong foundation in digital public infrastructure underscore India’s potential for sustained medium-term growth and continued social welfare gains."

It called for "comprehensive structural reforms" to create high-quality jobs, invigorate investment, and unleash higher potential growth. "Efforts should focus on implementing labour market reforms, strengthening human capital, and supporting greater participation of women in the labour force," said the report.

'Revision of quarterly numbers in May likely'

SBI Research's latest analysis on the Q3 GDP numbers said that based on the FY25 GDP growth estimate of 6.5%, Q4 GDP growth is derived at 7.6%, but it is expected that there will be a revision of quarterly numbers in May 2025.

Clocking 6.2% GDP growth in Q3 FY25, India's economy showed robust growth in agriculture and industry, especially manufacturing activities during the quarter, ensuring GVA increased by 6.2% in Q3FY25 (5.8% in Q2FY25), the SBI report says.

Also, the report says the real GDP growth rate of 9.2% for 2023-24 is the highest in the previous 12 years except FY22 growth (9.7%, which was highest since independence).

Notably, the real GDP growth for FY23 and FY24 have been revised upwards by 62 bps and 104 bps, respectively, as both yearly and quarterly past growth numbers have been revised. There are also large revisions in the quarterly number of FY24. The quarterly GDP growth numbers of FY24 increased by 142 bps to 9.7% in Q1, 126 bps to 9.3% in Q2, 94 bps to 9.5% in Q3 and 60 bps to 8.4% in Q4. For the current fiscal, while Q1 numbers have been revised downward by 13 bps to 6.5%, Q2 numbers stand revised upward by 22 bps to 5.6%.