India’s GDP Growth Slows To Two-Year Low At 5.4% In July-September

India’s economic growth slowed to a nearly two-year low of 5.4 per cent in the July-September quarter of the current fiscal year, according to data released by the National Statistical Office (NSO) on Friday. The sluggish performance was attributed to weak output in the manufacturing and mining sectors. Despite the deceleration, India retained its position as the fastest-growing large economy, outpacing China’s 4.6 per cent growth during the same period.

The gross domestic product (GDP) expanded by 8.1 per cent in the corresponding quarter of 2023-24. The last time growth fell below this level was in the October-December quarter of FY23 when it stood at 4.3 per cent.

The agriculture sector offered some relief, with its Gross Value Added (GVA) growth accelerating to 3.5 per cent in Q2 FY25, compared to 1.7 per cent a year earlier. However, manufacturing GVA growth slowed to 2.2 per cent from 14.3 per cent in the same quarter last year, while the mining and quarrying sector’s GVA contracted to 0.01 per cent, a sharp decline from the 11.1 per cent growth recorded a year ago.

The financial, real estate, and professional services sectors saw modest improvement, growing by 6.7 per cent, up from 6.2 per cent in the same period last year. Meanwhile, electricity, gas, water supply, and other utility services posted slower growth at 3.3 per cent, compared to 10.5 per cent in the year-ago period.

The construction sector grew by 7.7 per cent in Q2 FY25, down from 13.6 per cent in the previous year. The GDP for the April-June quarter of FY25 remained unchanged at 6.7 per cent.

According to the NSO, "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." Nominal GDP for the same period was estimated at Rs 76.60 lakh crore, reflecting a growth rate of 8.0 per cent.

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On a half-yearly basis, real GDP for April-September FY25 was estimated at Rs 87.74 lakh crore, reflecting a 6 per cent growth rate compared to Rs 82.77 lakh crore in H1 FY24. Nominal GDP in the first half of FY25 stood at Rs 153.91 lakh crore, registering an 8.9 per cent growth from Rs 141.40 lakh crore in the corresponding period last year.

Fiscal Deficit Update

In fiscal terms, the government’s deficit for the first seven months of FY25 reached 46.5 per cent of the full-year target. Data from the Controller General of Accounts (CGA) revealed that the fiscal deficit stood at Rs 7,50,824 crore during the April-October period. This compares to 45 per cent of the Budget Estimates recorded during the same period in FY24.

The fiscal deficit represents the gap between government expenditure and revenue. The figures highlight the challenges in balancing economic recovery with fiscal discipline in the current financial year.

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