India’s GDP Growth Expected to Rebound to 6.8% in January-March, Reports
India’s economy is poised for a significant rebound in the January-March 2025 quarter, with real GDP growth anticipated to reach 6.8% year-on-year, as reported by Kaushik Das, chief economist for India, Malaysia, and South Asia at Deutsche Bank AG. This optimistic forecast comes ahead of the official GDP release scheduled for May 30 and indicates a recovery from the 5.6% growth recorded in the July-September 2024 quarter. The projection also marks an increase from the 6.2% growth seen in the preceding October-December period.
GDP and GVA Growth Forecasts
The forecast for real Gross Value Added (GVA) growth stands at 6.5% for the fourth quarter of FY25, slightly below the GDP growth estimate. Das explains that the discrepancy between GDP and GVA growth can be attributed to a notable 44% decline in subsidy disbursements compared to the same quarter last year. This reduction in subsidies is expected to enhance net tax collections, which in turn will elevate GDP growth beyond GVA growth. While Deutsche Bank’s projections align with Bloomberg’s consensus estimates—6.8% for GDP and 6.4% for GVA—Das cautions that quarterly data is subject to revisions, which could lead to unexpected changes in the final figures.
Indicators of Economic Strength
Deutsche Bank’s India Macroeconomic Momentum Indicator (IMMI), which monitors five key metrics including industrial production and bank credit, supports the GDP growth projection of 6.8%. Additionally, the broader Composite Leading Indicator (CLI), derived from approximately 65 high-frequency indicators, also reflects positive economic momentum. Das highlights that inflation has contributed to a more favorable real growth outlook, with Consumer Price Index (CPI) inflation averaging 3.7% and Wholesale Price Index (WPI) at 2.3% in Q4. The GDP deflator is anticipated to decrease to 3%, down from 3.8% in the previous quarter, which could push real GDP growth beyond the 7% threshold. Nominal GDP growth is expected to be around 10% for the quarter.
Government Support and Long-Term Economic Outlook
Das emphasizes that both the government and the Reserve Bank of India are committed to fostering economic growth. He attributes the country’s resilience to strong fiscal-monetary coordination and ongoing structural reforms implemented over the past decade. These efforts have positioned India as the world’s fastest-growing major economy, making it an attractive destination for global investment. As multinational companies seek to optimize their supply chains, India’s scale and market potential are increasingly appealing. The Central Statistics Office (CSO) had previously raised its FY25 growth projection to 6.5%, anticipating a robust 7.6% GDP expansion in the March quarter. Initially viewed as overly ambitious, the latest data indicating a sharp decline in subsidies and easing inflation suggests that achieving a growth rate exceeding 7% is becoming more feasible.
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