New Delhi : India’s economic growth rate (India’s GDP) has slipped to 5.4% in the second quarter (July-September 2024) of the financial year 2024-25, according to data released by the Ministry of Statistics and Programme Implementation. This is a significant slowdown compared to the 8.1% growth recorded in the same quarter of the previous year.
Impact of Inflation on GDP:
The GDP data fell short of expectations due to rising retail food inflation and a decline in corporate results. The Reserve Bank of India (RBI) had also lowered its growth forecast, citing rising inflation as the main reason.
Q1 FY25 GDP:
In the first quarter (April-June) of FY2024-25, the GDP growth rate was 6.7%, the lowest in the last five quarters. In its MPC announcements on October 9, the RBI had projected India’s real GDP growth for FY25 to be 7.2%.
Real GVA:
Despite these figures, the real Gross Value Added (GVA) for the first half of FY2024-25 grew by 6.2%. In the second quarter, real GVA stood at 5.6%, significantly lower than the 7.7% recorded in the same quarter of the previous year. Nominal GVA growth also declined, standing at 8.1% in the second quarter compared to 9.3% in the corresponding quarter of the previous year.
Impact of Slow Manufacturing Growth:
The slowdown in manufacturing, which grew by only 2.2% in the second quarter, and the contraction in the mining sector (-0.1%) impacted the GDP.
Agricultural Sector Growth:
The agricultural sector showed some improvement after the previous four quarters, achieving a growth rate of 3.5%.
Construction and Services Sector:
The construction sector performed well, growing by 7.7% in the second quarter. The services sector also performed well, growing at a robust 7.1%, driven by a 6% growth in the trade, hotels, and transport sector.
