India’s GDP Growth Slows to 6.7% in Q1 FY25

Post author:kazirangatimes
Post published:August 31, 2024
Post category:News / National
Post comments:0 Comments

India’s GDP grew by 6.7% in the April-June quarter of FY25. This is down from 8.2% in the same period last year. It is also lower than the 7.8% growth seen in the previous quarter of FY24. The slowdown raises concerns about the strength of India’s economic recovery.

Table of Contents

Strong Performance in Key Sectors

Despite the GDP slowdown, the Gross Value Added (GVA) grew by 6.8%. This shows that some sectors are still performing well. The construction sector grew by 10.5%. This is impressive given the challenges, like slowing cement and steel production.

Manufacturing grew by 7%. This sector is crucial for India’s economic recovery. The electricity, gas, water supply, and utilities sectors also did well, growing by 10.4%.

Analysts’ Predictions vs. Actual Growth

The Reserve Bank of India (RBI) had predicted 7.1% growth this quarter, but actual growth fell short of this prediction. Analysts had varied expectations, ranging from 6% to 7.1%. ICRA predicted 6% growth. The State Bank of India (SBI) expected 7.1% growth. Acuite Ratings & Research forecasted 6.4% growth. The final figure aligns closely with these forecasts.

Nominal GDP and GVA Growth

Nominal GDP grew by 9.7% in Q1 of FY25. This reflects the impact of rising prices. Real GVA grew by 6.8% in the same period. The secondary sector, particularly construction and utilities, drove this growth.

Strong Consumer Spending

Private Final Consumption Expenditure (PFCE) grew by 7.4%. Gross Fixed Capital Formation (GFCF) increased by 7.5%. These figures show strong domestic demand.

Despite challenges like heatwaves and weak rural demand, consumer spending remained strong.

Optimism for Future Growth

The RBI also noted an increase in private corporate investment. Capacity utilization reached its highest level in 11 years. This suggests businesses are expanding and investing in new projects.

The RBI expects GDP growth to accelerate in the second half of FY25. Factors like government spending and festive season demand will drive this rebound.

Conclusion

India’s GDP growth slowed in Q1 FY25. However, key sectors like construction and manufacturing are still performing well. Consumer spending remains strong. The economy shows signs of resilience despite challenges. The RBI and analysts remain optimistic about future growth.