India Achieves 5.4% GDP Growth in Q2, Leading Global Economies
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New Delhi, Nov 29 (NationPress) India’s economic performance showed a GDP growth rate of 5.4% for the second quarter (July-September) of the ongoing financial year, based on the statistics published by the Ministry of Statistics on Friday.
Even though the growth rate has decelerated in the second quarter, India continues to be the fastest growing major economy globally, as China reported a growth of 4.6% during the July-September period.
Despite the slowdown in the Manufacturing sector (2.2%) and a slight decline in Mining & Quarrying (-0.1%) in Q2 of FY 2024-25, the real gross value added (GVA) for the first half (April-September) has shown a robust growth rate of 6.2%.
The agriculture and allied sectors have rebounded, achieving a growth rate of 3.5% in Q2 of FY 2024-25, following previous growth rates that were less than optimal, ranging from 0.4% to 2%.
In construction, ongoing domestic demand for finished steel has led to impressive growth rates of 7.7% and 9.1% in Q2 and H1 of FY 2024-25, respectively, according to the official announcement.
The tertiary sector reported a growth rate of 7.1% in Q2 of FY 2024-25, up from 6% in the same quarter of the previous financial year.
Particularly, sectors such as Trade, Hotels, Transport, Communication, and Broadcasting services experienced a growth rate of 6% in Q2 of FY 2024-25, compared to 4.5% in Q2 of 2023-24.
Another encouraging development is the increase in Private Final Consumption Expenditure, which recorded growth rates of 6% and 6.7% in Q2 and H1 of FY 2024-25, respectively, compared to 2.6% and 4% in the previous financial year.
Private consumption constitutes 60% of the nation’s GDP, and this uptick in growth is promising for future prospects.
Government Final Consumption Expenditure also bounced back, registering a growth rate of 4.4% after a slowdown attributed to the Lok Sabha elections in the previous quarter.
India's economic growth rate dropped to 6.7% year-on-year in the April-June quarter, influenced by reduced government spending due to national elections, yet it remains the world’s quickest major economy.
The growth in GDP was lower than the 7.8% per cent growth recorded in the prior quarter.
Nevertheless, it surpassed the 4.7% per cent growth of China, the largest economy in Asia, in the April-June period. Economists project that the slowdown is likely temporary, with easing inflation and a rise in government expenditure expected to boost growth in the upcoming months.
The Gross Value Added (GVA), viewed as a more reliable growth metric by economists, grew by 6.8% in April-June year-on-year, compared to 6.3% in the previous quarter.
Consumer spending, which makes up approximately 60% of GDP, reached a seven-quarter peak of 7.4% in April-June from the previous year, a rise from 4% in the earlier quarter. Capital investments also increased by 7.4%, surpassing 6.5% in the last quarter.
Looking ahead, it is anticipated that food inflation will decline, and the economic outlook is described as "cautiously optimistic" for the coming months, as the agricultural sector is expected to benefit from favorable monsoon conditions, higher minimum support prices, and sufficient input supplies, according to the Finance Ministry’s economic review released this week.
In a challenging global environment, following a brief period of soft momentum during the monsoon months, multiple high-frequency economic indicators in India have shown signs of recovery in October. This includes indicators related to both rural and urban demand, as well as supply-side metrics such as the Purchasing Managers’ Index and E-way bill generation.
On the employment front, the formal labor market is expanding, with significant growth in manufacturing jobs and a strong influx of youth into organized sectors.
The Reserve Bank of India (RBI) has maintained its GDP growth forecast for the current fiscal year at 7.2% per cent.
"India’s growth narrative remains robust, driven by fundamental factors such as consumption and investment demand gaining traction. The outlook for private consumption, which is the cornerstone of aggregate demand, appears promising due to an enhanced agricultural outlook and increased rural demand.
"Continued strength in services is also likely to support urban demand. Government spending at both the Centre and the states is expected to accelerate in line with budget forecasts. Investment activities are set to benefit from both consumer and business optimism, alongside the government’s ongoing commitment to capital expenditure and robust balance sheets among banks and corporations," stated RBI Governor Shaktikanta Das during the monetary policy review last month.
