New Delhi: According to a report from Union Bank of India, India's economy is projected to experience growth in Q4FY25, driven by consistent government spending and capital expenditure (Capex), along with increased consumption linked to the Maha-Kumbh and wedding season.
The report highlights that the Reserve Bank of India (RBI) has been instrumental in fostering growth through interest rate reductions, liquidity support, and regulatory changes, including the easing of macroprudential measures.
These initiatives, along with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) MSME scheme, are anticipated to enhance credit growth in the upcoming months.
Nevertheless, the report cautions about significant risks, noting that ongoing tariff disputes and rising geopolitical tensions could hinder economic recovery.
India's economic growth recorded a rate of 6.2 percent in Q3FY25. However, signs of recovery are emerging, with the report forecasting a growth rate of 7.6 percent in Q4FY25, indicating a possible rebound in the near future.
"India's GDP increased by 6.2% in Q3FY25, following a revised low of 5.6% (up from 5.4%) in Q2FY25. The annual growth forecast for FY25 has been adjusted from 6.4% to 6.5%, leading us to anticipate a 7.6% growth in Q4FY25 to meet this target," the report states.
The Gross Value Added (GVA), which reflects the total value generated by businesses, rose by 6.2 percent in Q3FY25, up from 5.8 percent in Q2FY25, driven by strong performance in agriculture and industry, particularly in manufacturing during the quarter.
The recent GDP figures, when compared to previous years, reflect a decline that can be assessed through economic consumption patterns and the latest trends in the stock market.
Although growth has slowed, the report indicates that government fiscal expenditures, along with a seasonal rebound in consumption, are expected to provide a boost in the upcoming months.
Furthermore, despite a challenging global economic landscape, India's economic activity is projected to remain robust, supported by strong demand in rural areas and a recovery in urban consumption, as noted by Chief Economic Adviser Anantha Nageswaran on Friday.
The report also highlighted that the Reserve Bank of India (RBI) has implemented measures to foster growth, including liquidity support and a supportive monetary policy.
In February 2025, the RBI reduced interest rates by 25 basis points to stimulate investment and consumption.
Moreover, the central bank has been proactively managing liquidity through Open Market Operations (OMOs) and has introduced regulatory adjustments to promote credit growth, particularly for micro, small, and medium enterprises (MSMEs) and non-banking financial companies (NBFCs).
