India's GDP growth slows to 5.4% in July-Sept, lowest in two years
PTC Web Desk: India’s gross domestic product (GDP) growth slowed to 5.4% in the second quarter (July-September) of FY2024-25, marking its weakest performance in nearly two years, according to data released by the National Statistical Office (NSO) on Friday. The dip was attributed to muted activity in manufacturing and mining sectors, though India remained the fastest-growing large economy globally, surpassing China’s 4.6% growth during the same period.
The GDP growth rate for Q2 FY25 is a sharp decline from the 8.1% expansion recorded in the corresponding quarter of FY24. The last time GDP growth fell below this level was in Q3 FY23 (October-December 2022), when it stood at 4.3%.
Sectoral Analysis
Agriculture emerged as a bright spot, with its gross value added (GVA) accelerating to 3.5% in Q2 FY25, up from 1.7% in the same period last year. However, other key sectors underperformed:
Manufacturing: GVA growth plummeted to 2.2% from 14.3% in Q2 FY24, reflecting weakened industrial activity
Mining and Quarrying: The sector contracted marginally, with GVA declining to 0.01% compared to 11.1% growth a year earlier
Financial, Real Estate, and Professional Services: The sector expanded by 6.7%, marginally higher than the 6.2% growth recorded last year
Construction: Growth decelerated to 7.7%, down from 13.6% in Q2 FY24
Electricity, Gas, Water Supply, and Utilities: The sector grew by 3.3%, significantly lower than the 10.5% expansion recorded a year earlier.
Despite the overall slowdown, India maintained its position as the world’s fastest-growing large economy. Analysts attribute this to India’s strong domestic demand and resilience compared to global economic challenges.
Quarterly and Half-Yearly Data
The NSO estimated that real GDP (at constant prices) for Q2 FY25 stood at Rs 44.10 lakh crore, compared to Rs 41.86 lakh crore in the same quarter of FY24. Nominal GDP (at current prices) grew by 8.0% to Rs 76.60 lakh crore from Rs 70.90 lakh crore.
For the first half of FY25 (April-September), real GDP grew by 6% to Rs 87.74 lakh crore, up from Rs 82.77 lakh crore in H1 FY24. Nominal GDP rose by 8.9% during the same period, reaching Rs 153.91 lakh crore.
Fiscal Deficit Widens
India's fiscal deficit for the first seven months of FY25 (April-October) reached Rs 7.51 lakh crore, accounting for 46.5% of the full-year target. This is slightly higher than the 45% recorded during the corresponding period of FY24, according to data from the Controller General of Accounts. The deficit reflects the gap between the government’s total expenditure and revenue. Analysts have cautioned that rising fiscal pressures, coupled with slower economic growth, may require tighter fiscal discipline in the coming months.
- With inputs from agencies
