CEA Nageswaran Explains Slowdown In India's Economic Growth In Q1FY25, Here's What He Said

Speaking to the media, the official said that general elections during the period also contributed to this decline in India’s gross domestic product (GDP) in the first quarter

The official explained that the domestic economy is maintaining its growth pace, however, potential geopolitical conflicts could further escalate and cause a damper on the path ahead. 

Source : PTI

Chief Economic Advisor (CEA) V Anantha Nageswaran on Friday explained that the slower economic growth seen in the April-June quarter of the current 2024-25 fiscal year (FY25) could be attributed to a decline in the capital expenditure of the government during the period.

Speaking to the media, the official said that general elections during the quarter also contributed to this decline in India’s gross domestic product (GDP) in the first quarter, reported Moneycontrol. 

Notably, the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) released the GDP data for the quarter ended June 30, 2024 on Friday. The official data showed that the domestic economy surged by 6.7 per cent during Q1, against a growth rate of 8.2 per cent clocked in the same period a year earlier. Sequentially, the last quarter of the 2023-24 fiscal year (FY24) recorded a GDP growth rate of 7.8 per cent.

Explaining the slowdown in growth, Nageswaran said, “Slight slowdown in GDP was anticipated due to elections and lower government capex in Q1. It was well within anticipation. Contraction due to Covid pandemic is behind us, GDP and GVA will continue to accelerate. Private sector capital formation is happening, it's playing its part in expanding the GDP scenario.”

The official explained that the domestic economy is maintaining its growth pace. However, potential geopolitical conflicts could further escalate and cause a damper on the path ahead, he noted. 

“But we expect crude prices to remain in the current range. There is, however, no anticipation that we will confront higher crude prices,” the official stated.

Going ahead, Nageswaran said that the economy can easily clock 6.5-7 per cent growth in the current fiscal year. He noted that a good monsoon and better private capital formation would help improve growth.