According to a report by the Union Bank of India (UBI), the Indian economy is expected to grow at a rate of 7.0% in the fourth quarter of the financial year 2025, up from 6.2% in the third quarter. This growth is driven by an improvement in Gross Value Added (GVA) growth, which is expected to increase to 6.7% in Q4 from 6.2% in Q3. The report notes that high-frequency indicators present a mixed trend, but the economic activity index suggests a slight upward bias.
The UBI report also notes that the revised estimate for full-year FY25 growth is likely to be lowered to 6.3% from 6.5% previously. The report cites various factors that are likely to support this growth recovery, including a possible revival in rural demand, continued government spending, and large-scale religious events like the Mahakumbh. The Mahakumbh, in particular, is expected to have a significant impact on the economy, with a nominal growth impact of Rs 2-3 lakh crore.
The Reserve Bank of India’s (RBI) GDP nowcast also projects Q4 FY25 growth at 6.6%, indicating a sequential improvement in economic momentum during the second half of FY25. The International Monetary Fund (IMF) has also projected India’s GDP at 6.2% in FY25 and 6.3% in fiscal 2026, driven by strong private consumption. However, the IMF notes that global growth is expected to slow to 2.8% in 2025.
Overall, the report suggests that the Indian economy is expected to experience a moderate growth recovery in the fourth quarter of FY25, driven by a combination of factors including government spending, rural demand, and large-scale events. However, the growth rate is expected to be lower than previously estimated, and the economy will need to navigate various challenges to achieve sustained growth in the long term. The UBI report’s heatmap of high-frequency indicators shows a mixed picture, but the economic activity index suggests a mild upward bias, indicating a pickup in private sector activity.