Significant GDP Recovery Anticipated Fueled by Private Capital Expenditure, Agricultural Growth, and Strong Consumer Demand
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New Delhi, Dec 2 (NationPress) The decrease in India’s Q2 GDP growth is viewed as a transient issue, influenced by seasonal monsoon impacts and factors related to elections, and it is anticipated to begin correcting by the January-March period (Q4) of FY25, according to industry experts.
For equity markets, this information is not expected to considerably affect performance.
“Any temporary decline in market sentiment could offer a chance for investors with surplus capital to establish long-term positions, considering the inherent strength in critical consumption and service sectors,” stated Dr Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital.
There are several positive indicators within the data, for instance, private consumption surged by an impressive 6 percent, which is substantially higher than the overall GDP growth rate and the 2.6 percent recorded in Q2 FY24.
“This alleviates recent worries regarding weakness in private consumption. Government consumption improved from the previous quarter, yet it was lower compared to the same time last year, likely due to cautious spending in anticipation of elections,” remarked Gupta.
The primary sector demonstrated stability with slight GVA growth, although mining faced challenges due to the monsoon.
In the secondary sector, the construction industry maintained robust performance. The tertiary sector notably grew at 7.1 percent, highlighting the resilience of both private and government consumption.
According to Jahnavi Prabhakar, economist at Bank of Baroda, despite a general moderation, private consumption exhibited strong growth of 6 percent in Q2 FY25, an increase from 2.6 percent in Q2 FY24.
“The agricultural sector showed significant growth at 3.5 percent in Q2 FY25, compared to 1.7 percent in Q2 FY24, driven by favorable monsoon conditions and higher kharif production.
“A significant recovery in H2 FY25 is anticipated, propelled by government and private capital expenditures, strong agricultural growth, and vibrant consumption demand, with GDP growth projected to be between 6.6-6.8 percent for FY25,” Prabhakar commented.
The demand for real estate has remained stable, as suggested by high-frequency indicators. Both buyer interest and developer sentiment toward the real estate sector continue to be steady.
