India’s economy expanded by 6.2% in October-December, picking up on increased government and consumer spending, official data showed on Friday, and the government said it expected a further acceleration in the current quarter.
A stronger rural economy also bolstered the world’s fifth-largest economy in the final quarter of 2024, but manufacturing growth remained subdued and the overall rise in GDP was well below peak quarterly growth rates seen in the three years after the pandemic.
India is still the world’s fastest growing major economy, but it also faces uncertainties over its trade with the United States and the Trump administration’s plans to impose reciprocal tariffs.
The gross value added (GVA), a measure of economic activity that is seen as a more stable measure of growth, grew 6.2% in October-December, compared to a revised 5.8% expansion in the previous quarter.
For the full year, the government now pegs GDP growth at 6.5%, marginally higher than its initial estimate of 6.4%, but below the revised growth rate of 9.2% for 2023-24.
To meet the growth estimate of 6.5% for the full financial year, India needs to grow at 7.6% in the January-March period.
India’s chief economic adviser, V Anantha Nageswaran, sees this as achievable. Resilient rural demand will support India’s growth while urban consumption is recovering, Nageswaran said at a press conference.
Urban consumption has weakened due to weak job and income growth while retail inflation remained high through much of last year. Inflation eased to 4.3% in January and the central bank expects it to average 4.2% in the financial year starting April 1.
Government spending rose 8.3% in the last three months of 2024 from a modest 3.8% increase in the previous three months.
Private consumer spending jumped 6.9% year-on-year, up from 5.9% in the previous quarter, buoyed by improved rural demand due to moderating food prices and more spending on purchases for the festival season than a year earlier.
The October-December GDP growth is “marginally better than our expectations,” said Gaura Sen Gupta, chief India economist at IDFC First Bank.
She attributed the pick-up to the agriculture sector and to a revival in rural demand.
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