Data released by the National Statistical Office (NSO) showed that India’s real GDP growth rate fell 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. This real GDP growth rate of India is much lower than the Reserve Bank of India’s (RBI) estimate of 7.1 per cent and the 7.8 per cent growth seen in the previous quarter. India’s GDP growth rate has reached 6.7% in the April-June 2024 period, which is the lowest in the last few years. This slowdown has had a profound impact on economic stability and growth.
Key facts related to the data released by the National Statistical Office (NSO)
- India is the world’s fastest growing economy: India remains the world’s fastest growing major economy in the first quarter, while China’s economy has slowed down at present.
- Union Finance Ministry’s stance: The pace of growth remains strong in the first quarter. In the medium term, the Indian economy can grow at a rate of more than 7% based on the structural reforms carried out in the last decade.
- Reserve Bank of India (RBI) forecast: RBI has reduced the GDP growth forecast for 2024-25 from 7.2% to 7.1%, keeping in mind the current economic instability and potential risks.
- Indian economy growing at a strong pace due to strong domestic demand: Driven by domestic demand in India and government spending on capital expenditure, the Indian economy has grown at a strong pace despite a slowing global economy and geopolitical challenges.
- Growth in the secondary sector: The secondary sector grew by 8.4 per cent in the first quarter of FY 2024-25, which includes construction (10.5 per cent), electricity, gas, water supply and other utility services (10.4 per cent) and manufacturing (7.0 per cent) sectors.
- Weakness in the agricultural sector: The agricultural sector grew at 2% in the first quarter of the current financial year, down from 3.7% in the first quarter of last year. However, good monsoon rains in India and higher sowing of Kharif are good signs for rural demand and agricultural production.
- Decrease in public expenditure: Public expenditure slowed down during the time of the Lok Sabha general elections in India, resulting in a 0.2 per cent decline in government final consumption expenditure in April-June. With a 35 per cent decline in government capital expenditure, economists say the government will have to make additional efforts to boost growth going forward.
- Consumption demand picking up: Private final consumption expenditure (PFCE) recorded a seven-quarter high growth of 7.4 per cent in the first quarter. According to the chief economic adviser, growth is expected to accelerate with improvement in rural consumption demand and remain at 6.5-7 per cent this fiscal.