Government data released on Friday (November 29) showed that India’s economic growth slowed down to 5.4 per cent in the second quarter of the ongoing fiscal (Q2 2024) July-September 2024 compared to the 8.1 per cent figure reported for the same period in 2023.
This is the lowest GDP growth rate in the past 7 quarters.
The number was well below experts’ expectations. A poll of 11 economists conducted by Moneycontrol, and a poll by CNBC-TV18, had both pegged median growth at 6.5 per cent.
Why did economic growth slow down?
The slowdown has been attributed to lowered government spending– owing to general elections– as well as weak consumption.
Economists have especially pointed out private consumption, which accounts for about 60 per cent of India’s GDP, has been affected by a slowdown in urban spending.
Urban spending in turn has been affected by higher food inflation, borrowing costs and sluggish real wage growth, despite signs of recovery in rural demand.
Additionally, climate change-induced adverse impact on several key industries are also being held responsible for the low growth.
Though it is the slowest growth in seven quarters, India still remains the fastest major economy in the world.
Sectoral performance showed mixed trends. Agriculture, one of the most prominent sectors in the Indian economy, improved to 3.5 per cent compared to 1.7 per cent year-on-year.
Mining contracted by 0.1 per cent compared to stellar growth of 11.1 per cent YoY. Manufacturing growth also slowed significantly to 2.2 per cent from a robust 14.3 per cent YoY.
The slowdown has already been reflected in Q2 corporate earnings.
Apart from Q2 GDP, the economic growth for the first half of the ongoing fiscal year also slowed down. The growth slowed to six per cent in the April-September period of 2024.
For the same period in the 2023 fiscal, the economic growth number stood at 8.2 per cent.
With inputs from agencies
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India Q2 GDP: Economy grows 5.4% in July-Sept, a 7-quarter low
