Mahakumbh Will Accelerate India's GDP in Q4
The surge is expected on the back of increased GST collections, e-way bill generation, toll collections and so on.
India’s GDP growth is expected to accelerate in the Q4 (January-March) quarter of the current financial year based on the high-frequency indicators of the economy, according to a Bank of Baroda report released on Wednesday.
The positive indicators which are showing an improvement in Q4 include the increase in GST collections which average Rs 3.8 lakh crore in January-February’25, up from Rs 3.4 lakh crore in January-February’24, e-way bill generation which has risen to 23.1 per cent in January ’25 versus 16.4 per cent in January ’24 and 16.9 per cent in Q3FY25 while toll collections average 16.7 per cent growth in January-February ’25 versus 11.2 per cent in January-February’24 and 14 per cent in Q3FY25.
The report states that while indicators such as air passenger traffic and vehicle registrations cooled down in the January-February’25 period, there is an upside bias to GDP growth in Q4FY25 supported by the Kumbh Mela boost to consumption, services and FMCG sector. For the full year, growth is estimated at 6.5 per cent, given the robust growth in the agriculture sector which has turned out to be a bright spot, registering a robust growth of 5.6 per cent in Q3 compared with 1.5 per cent increase in the same quarter last year, the report states.
The report also expects the RBI to lower key rates further to boost economic growth as inflation has come down. It points out that the RBI’s monetary policy committee unanimously lowered the repo rate by 25bps from 6.5 per cent to 6.25 per cent. The stance was kept at neutral. The RBI Governor noted the need for a “less restrictive” monetary policy to support growth as inflation remains within the RBI’s targeted band.
“On policy rate, we anticipate RBI will wait and watch before taking any action in April’25 given the moderation in headline inflation,” the BoB report states. An expected rebound in domestic GDP growth, range-bound oil prices, and strong external buffers are positive for the Indian rupee. However, given the continued volatility in the global financial system, the scope of rupee appreciation looks limited.
“We expect a range of 86.75-87.75/$ (and could also touch Rs 88/$ before reverting to this range) in the coming month,” the report added.
