India’s real gross domestic product (GDP) growth is set to fall to a five-quarter low of 6.7 per cent in April-June 2024-25 due to slow growth in agriculture, government spending and services, according to data released by the National Statistical Office (NSO).
The quarterly GDP growth rate for Q1, which fell below the 7 percent mark for the first time in a year, came in at 7.8 percent, much lower than the 7.1 percent estimate given by the Reserve Bank of India (RBI). The previous quarter saw an increase of 8.2 percent and the year-ago quarter saw an increase of 8.2 percent.
However, the manufacturing and construction sectors showed strong signs of growth with growth rates of 7.0 percent and 10.5 percent respectively in April-June as against growth of 5 percent and 8.6 percent in the year-ago period. Public expenditure was slowing, especially in the election phase, with government final consumption expenditure declining by 0.2 percent in April-June.
Chief Economic Advisor V Ananth Nageswaran said the slow GDP growth rate was “within consensus expectations”. “The conduct of elections has led to a reduction in capital expenditure. This is reflected in the final consumption expenditure of the government,” he said.
“Growth is expected to pick up with improvement in rural consumption demand and will be 6.5-7 percent this financial year,” CEA said. Asked about the slow pace of growth in the tertiary or services sector, which recorded overall growth of 7.2 percent in April-June compared to 10.7 percent in the year-ago period, Nageswaran said there has been a very strong improvement. In the first two-three years after the COVID-19 pandemic and those high levels have been maintained, resulting in strong growth in the base.
With a 35 percent decline in government capital expenditure in April-June (and an 18 percent decline in April-July), economists said the government will have to make additional efforts to compensate for the loss in spending. Initial months to promote further growth.
Sectorally, agriculture recorded a gross value added (GVA) growth rate of 2.0 percent in April-June compared with 3.7 percent in the year-ago period, while mining grew at 7.2 percent compared with 7.0 percent. Had happened. In the services sector, trade, hotels, transport, communication and broadcasting services recorded GVA growth of 5.7 percent in April-June, slower than 9.7 percent in the year-ago period.
The overall growth rate in terms of GVA came in at 6.8 percent in April-June, compared to 8.3 percent in Q1FY24. Usually GVA is less than GDP, but this time it was 0.1 percentage point higher. GDP is GVA plus net product taxes (taxes – subsidies).
Government expenditure declined by 0.2 percent in Q1 FY24 compared to a contraction of 0.1 percent in Q1 FY24. Investment – as reflected in gross fixed capital formation (GFCF) – grew by 7.5 percent compared with 8.5 per cent in the year-ago period, which economists said mainly reflected an increase in private investment since the first The central government’s capital expenditure remained stable in the quarter.
