Govt capex, additional expenditure at Maha Kumbh to push GDP growth to 7.6% in Q4: CEA

A significant pick up in the government capex and additional expenditure linked to Maha Kumbh congregation are expected to push the fourth quarter GDP growth to 7.6%, required to achieve an overall economic expansion of 6.5% in the current fiscal, Chief Economic Adviser V Anantha Nageswaran said on Friday.

Briefing media on the third quarter GDP number, he said the data released by the National Statistics Office (NSO) augurs well, and the upwardly revised 6.5% GDP estimate for the current financial year is realistic.

During the third quarter ended December 2024, India's economic growth rate decelerated to 6.2% against 9.5% a year ago, mainly due to poor performance by mining, manufacturing and all other sectors, except agriculture.

NSO also released the second advance estimate for the current fiscal and pegged the economic growth at 6.5% against 6.4% estimated in the first advance estimate released in January.

To achieve 6.5% growth, India's GDP has to grow at 7.6% in the fourth quarter, which, according to experts, is optimistic.

Nageswaran noted that 7.6% growth is realistic and can be achieved during the fourth quarter.

"There are some good developments, such as a very significant pickup in government capex and the additional expenditure that we are seeing happening because of the footfalls in Maha Kumbh...that we have been seeing," he said.

Amidst external negative factors, he said, there are incremental positive factors, making a good case for implied growth of 7.6% being attained in the fourth quarter.

Asked about the stock market fall, he said looking at the long-term prospects of the Indian economy compared to other places and looking at the historical track record of the Indian market, one shouldn't be over-interpreting the near-term numbers.

Benchmark indices Sensex and Nifty tumbled nearly 2% on Friday, mirroring deep losses in global markets as the latest announcement of an additional 10% tariff on Chinese products rattled investors.

He also said that the Indian economy is on the verge of crossing $4 trillion in FY25.

Nominal GDP or GDP at current prices is estimated to attain a level of ₹331.03 lakh crore in the year 2024-25, against ₹301.23 lakh crore in 2023-24, showing a growth rate of 9.9%.

About inflation, Nageswaran said, it is trending down.

He further said that the near-term global economic outlook is influenced by the trade policies of major economies amid a slowing disinflation.

Despite the uncertain global outlook, he said, India’s economic momentum is expected to be sustained, driven by strong rural demand and a revival in urban consumption.

The robust kharif production and better rabi sowing, coupled with higher reservoir levels and seasonal winter correction in vegetable prices, augur well for food inflation going forward, he said.

The Union Budget’s emphasis on agriculture, MSMEs, investment, and exports is likely to enhance India's medium-term economic prospects, he added.