New Delhi, May 24: The Indian economy is projected to grow at 7.0% in the fourth quarter (Q4) of FY25, marking an improvement from 6.2% in the previous quarter, according to a report by Union Bank of India (UBI).
Despite this quarterly uptick, the report revised the full-year growth estimate for FY25 down to 6.3% from the earlier projection of 6.5%.
The report also anticipates an improvement in Gross Value Added (GVA), projecting 6.7% growth in Q4, up from 6.2% in Q3. The GVA measure, which excludes taxes and subsidies, provides a clearer picture of economic activity across sectors.
While high-frequency indicators have shown mixed signals, UBI’s internal economic activity index suggests a slight upward trend, particularly in private sector output. “Our heatmap of high-frequency indicators shows a mixed picture, even as our economic activity index signalled a mild upward bias. This index aligns closely with GVA excluding agriculture and government sectors, and indicates a rise to 6.8% in Q4 from 5.9% in Q3,” the report noted.
The report also cited the Reserve Bank of India’s (RBI) Bulletin, which signals a sequential improvement in economic momentum during the second half of FY25. The RBI's own GDP nowcast projects 6.6% growth in Q4 FY25.
Key drivers behind this recovery include a potential revival in rural demand, continued government expenditure, and large-scale public events such as the Mahakumbh, which could add significant nominal value to the economy. Media estimates suggest the Mahakumbh may contribute between ₹2 to ₹3 lakh crore to nominal GDP.
On the global front, the International Monetary Fund (IMF) recently forecast India’s GDP to grow 6.2% in FY25 and 6.3% in FY26, citing strong private consumption as the primary engine of growth, even as global economic expansion is expected to slow to 2.8% in 2025.
