Third Quarter Growth and Sectoral Performance
GDP growth in the third quarter of 2024-25 is 6.2%, an improvement from 5.6% in Q2.
Agriculture grew by 5.6%, while manufacturing improved slightly to 3.5% from 2.1% in Q2.
The services sector, particularly trade and hospitality, grew by 6.7%.
Concerns remain about achieving the 7.6% growth expected in Q4, particularly due to a high required growth in private consumption and government investment.
Annual Data Revisions
Real GDP growth for 2022-23, 2023-24, and 2024-25 has been revised upwards to 7.6%, 9.2%, and 6.5%, respectively.
Manufacturing and financial services saw the largest upward revisions in growth.
A sharp decline in gross capital formation contributed to a 2.7% drop in real GDP growth from 2023-24 to 2024-25.
The Incremental Capital-Output Ratio (ICOR) also changed, highlighting challenges in policy making due to these revisions.
Prospects for 2025-26 and Medium-Term Growth
Nominal GDP growth has been revised upwards, and 2025-26 growth may exceed 10.1% based on current trends.
Real GDP growth for 2025-26 is estimated at 6.3%-6.8%, with 6.5% appearing feasible if government investment grows.
Medium-term growth potential is pegged at 6.5%, with an emphasis on increasing savings and investment rates to support growth.
The investment-led growth strategy remains viable, with a real investment rate of 33.4% in 2024-25.
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