India Braces for GDP Upswing in Q3FY25 Amid Net Indirect Tax Concerns

India's economy is projected to grow at 6.2% in Q3FY25, up from 5.4% in Q2FY25, as per Union Bank of India. However, a decline in net indirect tax trends could pose a risk. The full-year GDP forecast remains at 6.4%, requiring significant growth in the latter half of FY25.

India's economic trajectory is poised for a positive shift in the third quarter of the fiscal year 2024-25, with GDP growth anticipated to reach 6.2%, an increase from the 5.4% witnessed in Q2FY25. This optimistic projection comes from a recent report by Union Bank of India.

While this prediction indicates robust economic momentum, the report warns of a potential disconnect as net indirect tax growth depicted in fiscal data declines. This discrepancy could sustain the negative gap between GDP and Gross Value Added (GVA) growth witnessed earlier in the year.

Despite maintaining a full-year GDP growth forecast of 6.4%, the report suggests this target necessitates a strong growth pace in the latter half of FY25. The paper also notes the historical tendency for GDP figures to be revised, which could impact future assessments of economic performance. February’s data release will be pivotal in defining future trends.