GDP growth slows to 7-quarter low of 5.4%; here is what economists say

India's gross domestic product (GDP) expanded 5.4 per cent in the July-September period, the slowest pace of growth in seven quarters, official data showed on Friday. The latest GDP reading fell short of many economists' expectations. GDP growth was recorded at 8.1 per cent in the corresponding period a year ago.

According to a Zee Business poll of economists, the country's GDP growth was expected to be at 6.5 per cent in the second quarter of FY25. 

Image: Ministry of Statistics & Programme Implementation

GDP Growth Rate at 5.4% in Q2 FY25 | What economists say

"The big GDP miss comes from the sectoral hit in the manufacturing sector, something which was somewhat visible in adjusted corporate operating profits. On the expenditure side, private consumption has moderated further, while government consumption has picked up. The GDP miss in Q2 makes the ask rate very high in H2 for us to even reach 6.5 per cent, our earlier FY25 forecast," said Madhavi Arora, Lead Economist, Madhavi Arora.

“Real GVA and GDP readings are a surprise on the downside, even lower than 6 per cent. While the slowdown was anticipated as government spending especially capex was weak, urban consumption witnessed a slackening; this print is however lower than expectations," said Anitha Rangan, Economist, Equirus.

While manufacturing, mining and electricity witnessed sub-par growth, sectors like agriculture, construction and services maintained some momentum, Rangan highlighted. 

"However, the Q2 slowdown is fairly priced in and looking at the prospective trends, we see a prospect of a good comeback," she said.

Here's how different sectors fared: 

• Manufacturing: 2.2 per cent
• Mining & quarrying: -0.1 per cent
• Agriculture & allied activities: 3.5 per cent
• Construction: 7.7 per cent

Real gross value added (GVA) growth stood at 5.6 per cent in the September quarter, lower than 7.7 per cent a year ago, according to official data. This is an alternative metric that gauges the value of goods and services produced in an economy over a given period of time. 

"Despite sluggish growth observed in Manufacturing (2.2 per cent) and Mining & Quarrying (-0.1 per cent) sectors in Q2 of FY 2024-25, real GVA in H1 (April-September) has recorded a growth rate of 6.2," said the Ministry of Statistics & Programme Implementation. 

For the first six months of the financial year, real GDP growth came in at 6.0 per cent and real GVA expansion at 6.2 per cent, according to the statistics department.