India GDP growth slumps to a seven-quarter low of 5.4% on “sluggish” manufacturing, mining

Manufacturing, which accounts for implicit 17 per cent of the full Gross Value Added (GVA) output, grew by conscionable 2.2 per cent successful July-September arsenic against 7 per cent maturation successful April-June and 14.3 per cent maturation successful the corresponding play past year. Mining and quarrying look to person been sharply deed by the extended rainfall arsenic it recorded a contraction of 0.1 per cent successful July-September compared with 7.2 per cent maturation successful the erstwhile 4th and 11.1 per cent successful the year-ago period.

Among the superior sectors, agriculture was the lone agleam spot with 3.5 per cent maturation successful July-September arsenic against 2 per cent successful the erstwhile 4th and 1.7 per cent successful the year-ago period. Construction assemblage recorded a maturation of 7.7 per cent successful Q2, slower than 10.5 per cent successful Q1 and 13.6 per cent successful the year-ago period.

Services assemblage grew slower than expected astatine 7.1 per cent successful Q2 arsenic against 7.2 per cent successful Q1 and 6 per cent successful the corresponding play a twelvemonth ago. Private last depletion expenditure, an indicator of depletion demand, grew by 6 per cent to Rs 24.82 lakh crore successful July-September arsenic against 7.4 per cent maturation successful Q1 and 2.6 per cent a twelvemonth ago.

The Ministry of Statistics and Programme Implementation said that contempt “sluggish growth” successful manufacturing and mining, maturation successful the archetypal fractional came successful astatine 6.2 per cent. “Despite sluggish maturation observed successful ‘manufacturing’ (2.2%) and ‘mining & quarrying’ (-0.1%) sectors successful Q2 of FY 2024-25, existent GVA successful H1 (April-September) has recorded a maturation complaint of 6.2%,” the MoSPI connection said.

Estimates from 12 economists had shown GDP maturation slowing to 6.5 per cent successful Q2. Slow gait of superior expenditure has been a interest adjacent arsenic it picked up successful Q2 aft the exemplary codification of conduct-induced slump during the Lok Sabha elections earlier, remaining beneath the year-ago levels for some states and Centre. Services maturation was expected to suffer immoderate momentum owed to a pullback successful recognition growth.

“GDP maturation dipped overmuch sharper than expected to a tepid 5.4% successful Q2 FY2025, with a fig of sectors throwing up antagonistic surprises, particularly the anaemic outturn of manufacturing maturation and the marginal contraction successful mining, arsenic good arsenic a slower than projected maturation of the services sector,” Aditi Nayar, Chief Economist, ICRA said.

The Reserve Bank of India (RBI) has projected GDP maturation complaint for FY25 astatine 7.2 per cent and 7.1 per cent for FY26. Last week, Economic Affairs Secretary Ajay Seth had said determination is “no important downside risk” to the 6.5-7 per cent maturation projection for the ongoing fiscal twelvemonth 2024-25, arsenic elaborate successful the Economic Survey, contempt a apt slowdown successful the September quarter.

Some economists inactive maintained that contempt the Q2 number, maturation volition prime up successful the 2nd fractional owed to betterment successful cultivation output and agrarian demand. “Following today’s downbeat information release, the outlook for H2 FY2025 is decidedly mixed. We foresee a apt betterment successful agrarian request owing to the robust maturation successful kharif foodgrain output and upbeat outlook for rabi crops amid replenished reservoir levels, arsenic good arsenic expectations of a back-ended prime up successful the Government of India’s capex. However, ICRA remains watchful of the interaction of a slowdown successful idiosyncratic indebtedness maturation connected municipality depletion arsenic good arsenic geopolitical and tariff-related developments connected commodity prices and outer demand. On balance, ICRA expects GDP maturation to pickup successful H2 FY2025, connected the backmost of Government capex, agri output and agrarian consumption, resulting successful a full-year enlargement of 6.5-6.7%,” Nayar said.