India's GDP hits 2-year low of 5.4 pc in July-Sept quarter of FY25

India's economic growth slowed to near two-year low of 5.4 per cent in the July-September quarter of this fiscal due to the poor performance of manufacturing and mining sectors as well as weak consumption. However, the country continued to remain the fastest-growing large economy, data showed on Friday (November 29).

The gross domestic product (GDP) had expanded by 8.1 per cent in the July-September quarter of 2023-24 fiscal and 6.7 per cent in first quarter of current fiscal (April-June 2024).

The previous low level of GDP growth at 4.3 per cent was recorded in the third quarter (October-December 2022) of financial year 2022-23.

Falling consumption

The data also showed that the growth of private final consumption expenditure (PFCE), which indicates consumer spending, decelerated to 6 per cent in September quarter from 7.4 per cent in April-June this year.

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However, India remained the fastest-growing major economy as China's GDP growth in the July-September quarter this year was at 4.6 per cent.

"Real GDP growth print of 5.4 per cent is on the lower side and it is disappointing but there are some bright spots," Chief Economic Advisor V Anantha Nageswaran said while addressing the media.

Agriculture and allied sector and construction sector are some of the bright spots, he added.

Negative surprises

Commenting on the data, Aditi Nayar Chief Economist and Head - Research & Outreach, ICRA Ltd, said: "GDP growth dipped much sharper than expected to a tepid 5.4 per cent in Q2 FY25, with a number of sectors throwing up negative surprises, especially the anemic outturn of manufacturing growth and the marginal contraction in mining, as well as a slower-than-projected growth of the services sector."

According to the National Statistical Office (NSO) data, the growth of agriculture sector GVA (Gross Value Added) accelerated to 3.5 per cent in the latest July-September quarter from 1.7 per cent a year ago.

The GVA in the manufacturing sector slowed to 2.2 per cent in the second quarter of the current fiscal compared to an expansion of 14.3 per cent in the year-ago period.

Sector-wise trends

As per the data, the output (GVA) in the 'mining and quarrying' contracted to 0.01 per cent in the second quarter against a growth of 11.1 per cent a year ago.

The expansion in financial, real estate and professional services' GVA was 6.7 per cent, up from 6.2 per cent in the year-ago quarter. Electricity, gas, water supply and other utility services grew by 3.3 per cent, slower than 10.5 per cent a year ago.

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The construction sector recorded a growth of 7.7 per cent in the second quarter, down from 13.6 per cent year on year. The growth in gross domestic product (GDP) during the April-June quarter of 2024-25 remained unchanged at 6.7 per cent.

Real GDP

"Real GDP or GDP at constant prices in Q2 of 2024-25 is estimated at Rs 44.10 lakh crore, against Rs 41.86 lakh crore in Q2 of 2023-24, showing a growth rate of 5.4 per cent," the NSO said in a statement.

Nominal GDP or GDP at current prices in Q2 of 2024-25 is estimated at Rs 76.60 lakh crore, against Rs 70.90 lakh crore in Q2 of 2023-24, showing a growth rate of 8.0 per cent, it added.

On a half-yearly basis, the statement said the real GDP or GDP at constant prices in April-September of 2024-25 (H1 FY25) is estimated at Rs 87.74 lakh crore, against Rs 82.77 lakh crore in the first half of 2023-24, showing a growth rate of 6 per cent.

Nominal GDP or GDP at current prices in H1, 2024-25 is estimated at Rs 153.91 lakh crore, against Rs 141.40 lakh crore in H1 of 2023-24, showing a growth rate of 8.9 per cent, it stated.

Fiscal deficit at 46.5%

Meanwhile, the government data showed that the Centre's fiscal deficit at the end of the first seven months of the current financial year touched 46.5 per cent of the full-year target.

In absolute terms, the fiscal deficit — the gap between government's expenditure and revenue — was at Rs 7,50,824 crore during the April-October period, according to data released by the Controller General of Accounts (CGA).

The deficit stood at 45 per cent of the Budget Estimates (BE) in the corresponding period of 2023-24.

As regards the output of eight key infrastructure sectors, it expanded by 3.1 per cent in October 2024, sharply down from a 12.7 per cent growth registered in the same month last year.

On a monthly basis, the production growth of these sectors was higher than the 2.4 per cent expansion recorded in September 2024. PTI KKS CS HVA