• Notification Date: 07-01-2025
• Notification No: N/A

Mixed signals from Indian economy in Q3 as growth slows

India's economic performance in the third quarter of FY25 could be hinted at showing some kind of struggle as both directions of trend in its key sectors surfaced in this quarter. GST collection ran quite strong with all probability to hit the Rs 1.7 lakh crore mark straight ten times, while the pace of growth now decelerated further to 7.3% in December. This means a deceleration in comparison to preceding months and shows how the economic activity might be moving slow.

GST collections were north of last month's, but the annual growth rate had seemed to slow a bit, reflecting post-festive consumer spending slowdown. "Short-term slowdown is indicated by data, but gross collections witnessed 8.3% growth during Q3FY25 compared with the quarter-ago period," noted Saurabh Agarwal, Tax Partner at EY India.

The manufacturing sector did not do any better. For December, the Purchasing Managers' Index dipped to a 12-month low of 56.4, which meant manufacturing activity was at its weakest level in the last four quarters and was slowing sectoral growth.

Consumption is showing some signs of revival, at least on the positive side, because while the overall economy seems to be slowing down, UPI has seen a whopping 40.8% growth in Q3FY25 and transactions amount to a staggering 48.8 billion, valued at Rs 68.3 lakh crore; therefore, all signs of strong adoption of digital payments are visible.

Paras Jasrai of India Ratings and Research expects GDP growth at 6.5% for Q3FY25, which is supported by government capex and infrastructure activity. However, sectors such as manufacturing and mining continue to remain weak.