India's economy expanded by 6.2 percent in October-December, picking up on increased government and consumer spending, official data showed on Friday, and the government said it expected a further acceleration in the current quarter.

A stronger rural economy also bolstered the world's fifth-largest economy in the final quarter of 2024, but manufacturing growth remained subdued and the overall rise in GDP was well below peak quarterly growth rates seen in the three years after the pandemic.

"GDP figures show that India's economy remained fairly soft by its own standards at the end of last year. But with policy now decisively turning more supportive, economic growth should pick up further over the coming quarters," Capital Economics' Harry Chambers said.

India is still the world's fastest growing major economy, but it also faces uncertainties over its trade with the United States and the Trump administration's plans to impose reciprocal tariffs.

Growth in gross domestic product in October-December was slightly lower than the 6.3 percent expansion projected by analysts in a Reuters poll, and the central bank's estimate of 6.8 percent. The economy grew 5.6 percent in the previous quarter.

The gross value added (GVA), a measure of economic activity that is seen as a more stable measure of growth, grew 6.2   percent  in October-December, compared to a revised 5.8   percent  expansion in the previous quarter. For the full year, the government now pegs GDP growth at 6.5 percent, marginally higher than its initial estimate of 6.4 percent, but below the revised growth rate of 9.2 percent for 2023-24.

To meet the growth estimate of 6.5   percent for the full financial year, India needs to grow at 7.6 percent in the January-March period.

India's chief economic adviser, V Anantha Nageswaran, sees this as achievable. Resilient rural demand will support India's growth while urban consumption is recovering, Nageswaran said at a press conference.

Urban consumption has weakened due to weak job and income growth while retail inflation remained high through much of last year. Inflation eased to 4.3 percent in January and the central bank expects it to average 4.2 percent in the financial year starting April 1.

Government spending rose 8.3   percent in the last three months of 2024 from a modest 3.8 percent increase in the previous three months.

Private consumer spending jumped 6.9 percent year-on-year, up from 5.9 percent in the previous quarter, buoyed by improved rural demand due to moderating food prices and more spending on purchases for the festival season than a year earlier.

The October-December GDP growth is "marginally better than our expectations," said Gaura Sen Gupta, chief India economist at IDFC First Bank.

She attributed the pick-up to the agriculture sector and to a revival in rural demand.

Agricultural output rose 5.6 percent year-on-year from a revised 4.1 percent in the previous quarter, but growth in manufacturing, which contributes about 17 percent of the economy, remained subdued at 3.5 percent against a revised 2.1 percent in the previous quarter.

To boost the economy, India's central bank cut interest rates this month for the first time in nearly five years and left the door open for further rate cuts as inflation eases.

Personal income tax cuts announced in the annual budget on February 1 are also seen aiding consumption.

Economists see at least one more rate cut in April, when the monetary policy committee meets next, according to a Reuters poll.

"While this growth print brings some relief for the central bank, given continued global headwinds, we expect another rate cut in April 2025," said Sakshi Gupta, principal economist at HDFC Bank.