India’s Real Gross Domestic Product (GDP) for the second quarter of FY 2024-25 stands at 5.4% as opposed to 8.1% during the same period last year. During the first quarter of this financial year,the real GDP was 6.7%.
This number was largely anticipated by economists owing to weaker consumption, subdued government spending and bad weather conditions affecting several industries. Growing retail inflation, which was at a fourteen-month high in October at 6.21%, also seems to have contributed to this.
“Bulk of the slowdown has been predominantly due to the manufacturing sector. And some of it is partly due to the presence of excess capacity elsewhere and imports dumping in India and naturally the manufacturing process slowed down,” said Chief Economic Adviser to the Government of India, V Anantha Nageswaran.
“Agriculture has done quite well. The other bright spot is construction. Over the last full year, the construction sector has been growing at very high single digits and continued that growth rate in the first half of the current financial year as well,” he added.
Economists, however, are also of the opinion that it is too early to revise India’s annual forecast as GDP numbers are likely to pick up in subsequent quarters. The Reserve Bank of India (RBI) has indicated a 7.2% growth rate for the economy, while the finance ministry has projected it to be in the 6.5-7% range.
Earlier last week, Economic Affairs Secretary, Ajay Seth had stated that there was “no significant downside risk” to the finance ministry’s growth projections for the country.
Analysts are of the opinion that improved rural demand driven by a favourable harvest, uptick in construction and service sectors as well as increased state spending are likely to power growth in the remaining two quarters.
ALSO READ:
Indian economy presents a picture of stability and strength: RBI Governor
Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.