India’s Economy Expected to Accelerate in Q3 FY2025: ICRA Report

India’s economy is projected to grow at a faster pace in the third quarter of the current financial year (October–December 2024) compared to the first half, according to a report by credit rating agency ICRA. This optimistic outlook is fueled by strong economic indicators and robust sectoral activity, signaling resilience and sustained recovery.

Preliminary data for November 2024 points to a favorable trend. Increased electricity demand, buoyed by a favorable base effect, and sustained festive season demand that boosted vehicle registrations are key contributors to this momentum. “These trends reinforce ICRA’s expectations of a pick-up in GDP growth in Q3 FY2025 as compared to H1 FY2025,” the report stated.

Sectoral Growth Highlights

Sector-specific data underscores the economic upturn. Vehicle registrations rebounded sharply, posting a 32.4% year-on-year growth in October 2024, recovering from an 8.7% contraction in September. The demand for two-wheelers and passenger vehicles played a significant role in this resurgence.

Petrol consumption also surged by 8.7% in October, compared to 3.0% in September. Domestic air passenger traffic followed suit, recording 9.6% growth, up from 6.4% in the prior month.

Industrial activity showed marked improvement, with two-wheeler production increasing by 13.4%. Rail freight volumes, which had contracted by 0.7% in September, rose by 1.5% in October. Diesel consumption saw a slight growth of 0.1%, recovering from a 1.9% decline in the previous month.

India’s non-oil exports demonstrated robust growth, rising by 25.6% in October compared to a 6.8% increase in September. Key sectors driving this growth included electronic goods, engineering goods, chemicals, and readymade garments.

Economic Activity Monitor Reflects Resilience

ICRA’s Business Activity Monitor, a composite measure of economic performance, recorded a year-on-year growth of 10.1% in October 2024—the highest in eight months. This marked improvement, despite challenges posed by a high base effect, reflects the underlying strength of India’s economy.

Outlook for Q3 FY2025

ICRA’s findings suggest a positive trajectory for India’s GDP in Q3 FY2025, building on the recovery witnessed in October and November. The robust growth across key sectors, coupled with sustained domestic demand, reinforces confidence in the nation’s economic resilience and its ability to navigate global challenges effectively.