Rural Consumption Recovery and Government Initiatives Set to Propel Indian Economy Forward in Q3 FY25
The Indian economy is showing early signs of growth pickup in Q3 FY25 as rural consumption is showing recovery due to a good monsoon season, which exceeded the long-term average by 8 per cent, according to a report on Wednesday.
Mumbai: India’s economy is witnessing early signs of growth recovery in Q3 FY25, as rural consumption rebounds following a favorable monsoon season that exceeded the long-term average by 8%. According to a report by Motilal Oswal Financial Services (MOSL), this positive trend is expected to drive economic momentum in the coming months.
The report highlights the BJP-led NDA government’s recent victories in state elections and by-elections, which are expected to enhance focus on development initiatives and boost capital expenditures. This will likely fuel continued growth across key sectors, including BFSI (Banking, Financial Services, and Insurance), capital goods, technology, healthcare, and real estate.
BFSI Sector Drives Earnings Growth
Earnings in Q3 FY25 are projected to mirror the growth seen in Q2 FY25, with the BFSI sector playing a pivotal role. Adjusted earnings growth for the BFSI universe is expected to reach 8%, driven by strong performance in insurance (+23%), PSBs (+13%), non-lending NBFCs (+39%), lending NBFCs (+8%), and private banks (+2%).
Capital Goods Sector Sees Significant Growth
The capital goods sector is expected to experience a robust 26% YoY growth in earnings during Q3 FY25, despite expectations of weak order inflows due to the election year. The report suggests that order activity, particularly in thermal power, renewables, transmission & distribution, data centers, and buildings, remains strong, with a significant ramp-up in orders expected from Q4 FY25.
Key Upcoming Events: Union Budget and RBI Monetary Policy
The Union Budget and the RBI’s monetary policy meeting in February are critical events that markets are closely watching. The Union Budget will provide insights into government plans for capital expenditure and consumption-boosting measures. Meanwhile, the RBI’s decisions will play a crucial role in determining future interest rate trends.
Also Read: Indian Stock Market Opens Flat, Nifty Slips Below 23,700 Amid Weak Global Sentiment
Medium-Term Outlook for India Remains Positive
Despite potential challenges, the medium-term outlook for India remains promising. With strong growth prospects in rural consumption and key economic sectors, India is poised to maintain its growth trajectory into FY25 and beyond.
