Growth slows to five-quarter low of 6.7% during April-June
On a gross value added (GVA) basis, India’s economy grew 6.8% in the first quarter of 2024–25 compared to a growth rate of 8.3% in the same quarter of the previous financial year
New Delhi: India’s gross domestic product (GDP) growth slowed to a five-quarter low of 6.7% during April-June—the first quarter of 2024-25—compared to 8.2% from a year ago amid muted government spending, data released by the ministry of statistics and programme implementation on Friday showed.
In the April-June quarter of the previous financial year, the economy had expanded 7.76%.
Economic expansion is likely to have slackened to 6.85% in April-June, a median estimate from 25 economists polled by Mint, HT’s sister publication, showed. The poll attributed the slowdown to a lack of economic momentum during the general elections, slowing government capital expenditure, and an irregular monsoon.
On a gross value added (GVA) basis, India’s economy grew 6.8% in the first quarter of 2024–25 compared to a growth rate of 8.3% in the same quarter of the previous financial year.
The GVA rate is a measure of growth that strips out net taxes (taxes minus subsidies) and therefore offers a more precise estimate of the value of output in an economy. GDP is the most widely used measure of economic output and represents the value of all goods and services produced in an economy.
Government spending, which has been a key driver of growth, grew by 9.5% during the April-June quarter, slower than 10.2% during the same period of the previous year. Private final consumption expenditure, a measure of households’ spending, improved marginally to 56.3% against 55.9% in the corresponding three months of the previous year.
GVA growth in the current year’s first quarter was mainly driven by a jump in the economy’s secondary sector, which registered an expansion of 8.4%.
The Reserve Bank of India (RBI) had revised its growth forecast for April-June by 20 basis points to 7.1% in its August monetary policy statement on account of lower government capital spending and muted corporate profitability. It, however, kept its forecast of full-year FY25 GDP growth steady at 7.2%. A basis point is one hundredth of a percentage point.
“The slight slowdown in GDP growth was anticipated due to elections (Lok Sabha), it was well within what was anticipated. Demand components have done well in terms of gross fixed capital formation and net exports,” said V Anantha Nageswaran, the government’s chief economic adviser, briefing reporters. He pegged India’s medium-term growth at 6.5-7%.
GVA in the secondary sector, a large employer, was led by construction (10.5%), electricity, gas, water supply, and other utility services (10.4%), and manufacturing (7.0%), the data showed.
Agricultural sector GVA slowed to 2% during the first three months of the current financial year, compared to 3.7% in the corresponding period of the previous year.
Separately, the combined index of eight core industries (ICI) grew 6.1% (provisional) in July this year from a year ago, data released by the ministry of statistics and programme implementation showed. Production of steel, electricity, coal, refinery products, cement, and fertilizers recorded positive growth in the month, the data showed.