India’s GDP Grows 6.2% in Q3 FY25 Due to Rising Government and Consumer Spending

This news is relevant to the following topics in the UPSC Civil Services Examination (CSE):

GS Paper 3 (Indian Economy & Economic Growth)
- GDP Growth and National Income Trends.
- Role of Government Expenditure in Economic Development.
- Impact of Exports and Consumption on Economic Growth.
GS Paper 2 (Governance & Policies)
- Government Fiscal Policies.
- Role of Economic Planning in Sustainable Growth.

India’s GDP grew by 6.2% in Q3 (October-December 2024), up from 5.6% in the previous quarter.
The growth was driven by higher government spending, consumer demand, and export performance.
Gross Fixed Capital Formation (GFCF) slowed to 5.7%, indicating lower private investment.
Exports rose 10.4%, but imports fell 1.1%, partly due to the rupee depreciation.

GDP Growth Rate Trends
- The Q3 growth rate of 6.2% shows an improvement from 5.6% in Q2 but remains slower than the 9.5% growth recorded in Q3 FY24.
- The Reserve Bank of India (RBI) had estimated a 6.4% growth rate, but actual growth trailed slightly.
Key Economic Growth Drivers
- Government spending increased significantly, supporting economic activity.
- Private consumption rebounded, contributing to GDP expansion.
- Export growth of 10.4% helped offset weaker private investment.
Challenges to Sustaining Growth
- Investment slowdown observed in Gross Fixed Capital Formation (GFCF), which fell to 5.7% in Q3 from 9.3% in the previous year.
- Imports declined by 1.1%, reflecting lower domestic demand and rupee depreciation effects.

Gross Domestic Product (GDP) and Its Components
- GDP measures the total value of goods and services produced within a country.
- GDP growth is driven by:
  - Government Spending (Public Expenditure)
  - Private Consumption (Consumer Demand)
  - Investment (Capital Formation)
  - Net Exports (Exports – Imports)