The National Statistical Office (NSO) has released its latest GDP forecast, highlighting significant economic trends and challenges for the second quarter (Q2) of FY 2024-25. Below is a detailed analysis of the report.
India’s GDP Growth Trends: A Multi-Quarter Low
Quarterly Performance:
- Real GDP growth dropped to 5.4% in Q2 FY 2024-25, compared to 6.7% in Q1.
- Gross Value Added (GVA) growth also declined to 5.8% from 6.8% in Q1.
- This marks the slowest GDP growth in seven quarters, last seen at 4.3% in Q3 FY 2022-23.
Year-on-Year Comparison:
- Real GDP growth stood at 8.1% in Q2 FY 2023-24, while GVA growth was 7.7% in the same period.
Sectoral Performance
Agriculture and Allied Activities:
- GVA growth in agriculture rebounded to 3.5% in Q2 from 1.7% last year.
- The first half (H1) of FY 2024-25 saw slower growth at 2.7%, compared to 2.8% in H1 FY 2023-24.
Mining and Quarrying:
- Recorded a contraction of -0.1% in Q2, a stark contrast to 11.1% growth in Q2 last year.
Manufacturing:
- Growth dropped to a mere 2.2% from 14.3% in Q2 FY 2023-24.
Construction:
- GVA grew by 7.7%, significantly lower than the 13.6% seen a year ago.
Services Sector:
Public Administration, Defence, and Other Services:
- GVA rose by 9.2% from 7.7% last year.
Trade, Hotels, Transport, and Communication:
- Improved to 6.6%, up from 4.5% last year.
Financial and Professional Services:
- Marginal growth improvement to 6.7% from 6.2% last year.
Utilities (Electricity, Gas, and Water Supply):
- GVA growth slowed to 3.3%, compared to 10.5% in Q2 FY 2023-24.
Consumption and Investment
Private Final Consumption Expenditure (PFCE):
- Consumption spending grew by 6% in Q2, up from 2.6% a year ago.
- However, it slowed from the 7.4% growth recorded in Q1.
Gross Fixed Capital Formation (GFCF):
- Investment growth slowed to 5.4%, compared to 7.5% in Q1.
Half-Yearly (H1) Analysis
Real GDP Growth:
- Recorded at 6% for H1 FY 2024-25, marking the slowest six-month growth since H2 FY 2022-23.
Real GVA Growth:
- Estimated at 6.2%, reversing the trend where GDP growth outpaced GVA growth in FY 2023-24.
Government and RBI Projections
Reserve Bank of India (RBI):
- Projected Q2 GDP growth at 6.8%, while its overall FY forecast remains at 7.2%.
Finance Ministry:
- Estimates GDP growth to range between 6.5% and 7% for FY 2024-25.
NSO Data:
- Indicates a need for a sharp economic rebound in H2 FY 2024-25 to meet these projections.
Summary Table: Key Insights on India’s GDP Growth
| Aspect | Q2 FY 2024-25 | Q2 FY 2023-24 | Change |
|---|---|---|---|
| GDP Growth | 5.4% | 8.1% | Decline |
| GVA Growth | 5.8% | 7.7% | Decline |
| Agriculture GVA Growth | 3.5% | 1.7% | Improved |
| Mining and Quarrying GVA Growth | -0.1% | 11.1% | Sharp Decline |
| Manufacturing Growth | 2.2% | 14.3% | Sharp Decline |
| Construction Growth | 7.7% | 13.6% | Decline |
| Public Admin., Defence GVA Growth | 9.2% | 7.7% | Improved |
| Private Consumption (PFCE) | 6.0% | 2.6% | Improved |
| Gross Fixed Capital Formation (GFCF) | 5.4% | 7.5% | Decline |
