Daijiworld Media Network - Mumbai
Mumbai, Mar 2: India's economy is set to witness a strong rebound in Q4FY25, supported by increased government spending, capital expenditure (Capex), and a rise in consumption driven by the Maha-Kumbh and the wedding season, according to a report by Union Bank of India.
The report highlighted that the Reserve Bank of India (RBI) has continued its pro-growth measures through rate cuts, liquidity provisions, and regulatory adjustments, including the reversal of macroprudential tightening. These initiatives, coupled with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for MSMEs, are expected to accelerate credit growth in the coming months.
However, the report also cautioned about risks such as ongoing tariff wars and escalating geopolitical tensions, which could impact economic recovery.
India’s GDP growth rate stood at 6.2% in Q3FY25. However, signs of recovery are emerging, with Q4FY25 growth projected at 7.6%, indicating a potential economic turnaround. "India's GDP grew by 6.2% in Q3FY25 after a 7-quarter low of 5.6% (revised from 5.4%) in Q2FY25. The full-year FY25 projection has been revised from 6.4% to 6.5%, and a 7.6% growth in Q4FY25 is expected to achieve this target," the report noted.
Gross Value Added (GVA), which reflects the total value generated by businesses, expanded by 6.2% in Q3FY25, up from 5.8% in Q2FY25. The surge was attributed to robust growth in agriculture and manufacturing activities.
Despite lower growth figures compared to the previous year, economic recovery is evident in rising consumption and stock market performance. The report underlined that fiscal spending and seasonal consumption trends will drive growth in the coming months.
Chief Economic Adviser Anantha Nageswaran, on Friday, expressed confidence in India’s economic momentum, citing strong rural demand and a revival in urban consumption despite the uncertain global outlook.
The RBI has also played a crucial role in supporting economic growth through liquidity injections and an accommodative monetary policy. In February 2025, the central bank reduced interest rates by 25 basis points to stimulate investment and consumption. Additionally, it has been managing liquidity through Open Market Operations (OMOs) and regulatory relaxations to boost credit flow, particularly for MSMEs and NBFCs.
With continued policy support and rising demand, India’s economy is on track for a strong finish to the fiscal year.