The Brickwork Ratings (BWR) Economy Outlook for October –December 2024 Quarter  provides a comprehensive analysis of India’s economic landscape, highlighting a robust GDP growth of 6.2% in the third quarter of FY 2024-25. This growth reflects a rebound from previous quarters and is driven by increased rural consumption and government spending. The second advance estimates project an annual GDP growth of 6.5%, slightly below the Reserve Bank of India’s projection.

Key contributors to this growth include government expenditure, private consumption, and a strong agricultural sector, while challenges such as global trade uncertainties and sluggish urban demand persist. The outlook emphasizes the importance of continued government support, strategic reforms, and investment in infrastructure to drive future growth. India’s GDP grew by 6.2% in Q3 FY 2024-25, indicating resilience amidst global uncertainties. The resilience of the economy is attributed to robust rural demand and strategic government spending aimed at infrastructure and development projects. 

Key Insights: The agricultural sector’s growth of 5.6% during the quarter is crucial for supporting rural incomes and consumption. The favorable monsoon season contributed to higher crop yields, driving rural economic activity.  Government spending increased by 8.3% in Q3 FY 2024-25, significantly boosting economic activity. Such expenditure is focused on infrastructure development and public services, highlighting the government’s role in stimulating growth. This trend underscores the importance of fiscal policy in driving economic recovery, particularly in times of uncertainty.

Despite the overall growth, urban demand remains subdued, reflecting rising inequality and a concentration of wealth. This disparity poses a risk to sustained economic growth, indicating a need for targeted policies to address urban consumption challenges and stimulate demand across income levels. The potential for new U.S. trade tariffs and geopolitical tensions could exacerbate vulnerabilities in India’s export sector. The economy’s dependence on global markets necessitates strategic trade policies to mitigate risks and enhance competitiveness in international trade.

While there is an increase in private sector investment intentions, sustained momentum is crucial for long-term growth. The government needs to create a conducive environment for private investment, particularly in infrastructure and manufacturing, to ensure a balanced and inclusive economic expansion. Overall, the Outlook for October-December Quarter 2024 emphasizes the mixed signals within India’s economic landscape, highlighting both the strengths and challenges faced by the economy.

(This is an analysis by Brickworks Rating)