India Q3 FY25 GDP Growth, Rupee Decline, and Global Economic Impact

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Posted by BluraAirport-Admin on 2025-02-28 10:31:20 |

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India’s GDP growth for Q3 FY25 is estimated to be around 6.2%-6.3%, according to SBI Research’s ‘Nowcasting Model,’ provided there are no major revisions to the previous quarters' figures. The National Statistics Office (NSO) is set to release the official GDP numbers for FY2024-25 along with the Q3 estimate on February 28, 2025. In the first quarter of the financial year, GDP growth stood at 6.7%, but it dropped to 5.4% in the second quarter. This decline has raised concerns about whether the slowdown is part of a systemic issue or just a temporary cyclical phase. The NSO’s earlier projection for the entire fiscal year was set at 6.4%, which, if realized, would mark a four-year low compared to the 8.2% growth in FY24. If Q3 growth remains weak, India may fall short of the 6.4% annual target.  

Meanwhile, digital financial transactions saw a significant boost during the Mahakumbh in Prayagraj. Aadhaar Pay transactions surged by 66% compared to the previous month, highlighting increased adoption of biometric-based digital payments. Similarly, cash withdrawals through Aadhaar Enabled Payment System (AePS) and Micro ATMs increased by 19%. Mobile recharges rose by 32%, money transfers by 47%, and insurance services saw an 8% uptick, emphasizing the growing reliance on digital financial services even during large-scale public events.  

In another key development, India and Japan renewed their $75 billion bilateral currency swap agreement. Signed between the Reserve Bank of India (RBI) and the Bank of Japan, this arrangement enables both nations to exchange their local currencies for US dollars when required. The agreement aims to strengthen financial ties and enhance economic stability amid global uncertainties.  

The Indian rupee continued its decline for the fifth straight month, closing at 87.4950 against the US dollar in February. It briefly hit an all-time low of 87.95 during the month, primarily due to foreign portfolio outflows amounting to $12.5 billion in 2025 so far. The Sensex and Nifty also declined by 5.6% and 5.9%, respectively, amid weak investor sentiment. To stabilize the currency, the RBI conducted dollar-rupee swap auctions, which saw significant participation.  

Adding to global economic challenges, US President Donald Trump announced fresh tariffs on Mexican, Canadian, and Chinese imports, set to take effect on March 4. Analysts expect this protectionist stance to strengthen the US dollar while weakening emerging market currencies, including the Indian rupee. India’s economic landscape remains uncertain, with slowing GDP growth, a weakening currency, and external risks from global trade policies. However, the resilience shown in digital payments and financial cooperation with Japan provides some stability amid these challenges.

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