India enters 2025 in a robust economic position, with high-frequency indicators showing accelerated growth in Q3 FY25, according to a Bank of Baroda (BoB) report. Key sectors like GST collections, services PMI, air passenger growth, and vehicle registrations saw notable improvement compared to Q2.
GST collections rose by 8.3% year-on-year to ₹5.5 lakh crore in Q3, up from ₹5.3 lakh crore in Q2, indicating improved consumption patterns. Air passenger traffic increased by 11.6% in Q3, higher than the 7.8% growth in Q2, driven by festive demand. Services PMI averaged 59.2 in Q3, showcasing strong activity in the services sector.
Global economic signals remain uncertain. China struggles with slow manufacturing growth and challenges in boosting domestic consumption and real estate. The US economy sends mixed signals, with a softening labor market and weak manufacturing, but robust retail sales and services activity. In Europe, manufacturing remains sluggish, though the services sector shows recovery.
India’s current account deficit (CAD) narrowed to 1.2% of GDP in Q2 FY25, supported by strong services exports and remittances despite a higher trade deficit. The Sensex and Nifty 50 surged 8.7% and 9% in 2024, with Sensex reaching an all-time high of 85,500.
Real estate, consumer durables, and IT led stock market gains. The rupee depreciated by 2.8% in 2024 but remained resilient among peers. Bond market momentum improved due to India’s inclusion in global indices like JP Morgan and Bloomberg.
BoB predicts stronger quarterly corporate results for Q3 FY25 and recovery in H2 FY25. Inflation is expected to ease, allowing a potential 25 bps rate cut in February 2025. The report anticipates government spending and private investment will rise, boosting IIP growth in H2 FY25.
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