Battle for Growth, Pg 6

India’s Economic Growth Trends

• Q3FY25 Real GDP growth at 6.2%, improving from a revised 5.6% in the previous quarter.
• Growth slower than Q4FY23, reflecting global trade uncertainties and weaker manufacturing & services sectors.
• Primary sector growth: 5.2% (up from 1.8% last year).
• Manufacturing & services slowdown: 4.8% & 7.4% (compared to 12.4% & 8.3% last year).

Government Spending & Private Consumption Trends

• Public spending rose by 8.3%, while private consumption increased by 6.9%.
• Consumption growth was partly due to inflation moderation.

Trade & Global Challenges

• US proposed 25% tariffs on Indian steel and pharma exports (pharma exports to the US: $8.7 billion in FY24).
• Tariffs may cause revenue loss and force Indian firms to relocate production to the US.

Inflation & RBI Projections

• RBI’s inflation forecast: 4.8% in FY25, declining to 4.2% in FY26 (target: 4%).

Concerns Over NSO’s GDP Data Methodology

• NSO tweaked growth estimates based on "industry-wise/institution-wise" data.
• Lack of clarity on revisions raises questions about data reliability.

Analysis & Way Forward

• Sustaining GDP growth will require strengthening manufacturing & services through industrial reforms, infrastructure investment, and trade agreements.
• Government must clarify NSO’s methodology revisions to ensure data transparency & informed policymaking.
• Mitigating trade risks from US tariffs is crucial—India should diversify export markets and negotiate trade relaxations.

Mains Mock Question:

"Despite a rebound in GDP growth, India faces structural challenges in sustaining long-term economic momentum. Analyze the factors influencing growth in Q3FY25 and suggest policy measures for stable economic expansion."