GDP Growth for Q4 FY25 Expected at 7.0%, Says UBI Report. India’s Economy Gains Speed

India’s economy is set to accelerate in the fourth quarter of FY25, with GDP growth projected at 7.0%, according to a report by Union Bank of India (UBI). This marks an improvement from 6.2% in Q3 FY25, reflecting strong domestic demand, government spending, and a revival in rural consumption. However, the full-year FY25 GDP growth estimate has been revised downward to 6.3% from 6.5%, indicating mixed economic trends2.

Key Drivers of Growth

UBI’s report highlights several factors contributing to the Q4 FY25 GDP acceleration:

Rural Demand Revival: Increased agricultural output and higher disposable incomes in rural areas are expected to boost consumption.

Government Spending: Infrastructure projects and public sector investments continue to support economic activity.

Mahakumbh Impact: The large-scale religious event, Mahakumbh, is estimated to contribute ₹2–3 lakh crore to nominal GDP growth, further stimulating demand.

GDP Growth Sectoral Performance wise

The report provides insights into sector-wise growth trends:

Gross Value Added (GVA) Growth: Expected to rise to 6.7% in Q4 FY25, up from 6.2% in Q3.

Private Sector Activity: The economic activity index signals a mild upward bias, with private sector GVA (excluding agriculture and government) projected to reach 6.8% in Q4, compared to 5.9% in Q32.

Manufacturing & Services: Both sectors are witnessing steady expansion, driven by higher exports and domestic consumption.

Comparisons with Other Forecasts

RBI’s GDP Nowcast: The Reserve Bank of India (RBI) projects Q4 FY25 GDP growth at 6.6%, slightly below UBI’s estimate2.

IMF Projections: The International Monetary Fund (IMF) forecasts India’s GDP growth at 6.2% for FY25 and 6.3% for FY26, citing strong private consumption despite global economic slowdown2.

NITI Aayog 10th Governing Council Meeting, chaired by PM Modi

Challenges & Risks

Despite the positive outlook, certain challenges remain:

Global Economic Uncertainty: Slower global growth (projected at 2.8% in 2025) may impact India’s exports.

Inflation & Interest Rates: Persistent inflationary pressures and monetary policy decisions could affect consumer spending and investment.

Policy Adjustments: The government’s fiscal policies and structural reforms will play a crucial role in sustaining growth momentum.

GDP Growth Future Outlook

India’s economic trajectory remains strong, with Q4 FY25 growth expected to reach 7.0%. However, long-term sustainability will depend on policy measures, global economic conditions, and domestic demand trends. The next fiscal year (FY26) will be crucial in determining whether India can maintain its high growth rate and achieve its long-term economic goals.