India's GDP Growth Dips To 5.4% In September Quarter, Hits 7-Quarter Low

This slowdown is attributed to weak performance in the manufacturing and mining sectors

India's economic growth decelerated to a near two-year low (seven quarters) of 5.4 per cent in the July-September quarter of the current fiscal year, according to data released by the National Statistical Office (NSO) on Friday. This slowdown is attributed to weak performance in the manufacturing and mining sectors. However, India retained its position as the fastest-growing major economy, outpacing China's 4.6 per cent growth in the same period.

Key GDP Highlights

The gross domestic product (GDP) expanded by 5.4 per cent in Q2 of FY24-25, down from 8.1 per cent growth recorded in the same quarter last fiscal. This marks the slowest growth since the 4.3 per cent recorded in the October-December quarter of FY22-23.

For the April-June quarter of FY24-25, GDP growth stood at 6.7 per cent, unchanged from earlier estimates. Real GDP (at constant prices) in Q2 FY24-25 was valued at Rs 44.10 lakh crore, compared to Rs 41.86 lakh crore in Q2 FY23-24. In nominal terms, GDP rose by 8 per cent to Rs 76.60 lakh crore.

Sectoral Performance

Agriculture: Growth in Gross Value Added (GVA) in agriculture surged to 3.5 per cent in Q2 FY 2024-25, compared to 1.7 per cent a year earlier.

Manufacturing: GVA growth plummeted to 2.2 per cent, a sharp decline from 14.3 per cent in Q2 FY23-24.

Mining and Quarrying: The sector saw a near stagnation, with GVA growth at 0.01 per cent versus 11.1 per cent last year.

Construction: Growth slowed to 7.7 per cent from 13.6 per cent year-on-year.

Financial, Real Estate, and Professional Services: These sectors grew at 6.7 per cent, up from 6.2 per cent last year.

Utilities: Electricity, gas, and water supply recorded growth of 3.3 per cent, down from 10.5 per cent in Q2 FY 2023-24.

Half-Yearly Economic Overview

For the first half of FY 24-25, real GDP growth stood at 6 per cent, with the economy valued at Rs 87.74 lakh crore compared to Rs 82.77 lakh crore in H1 FY23-24. Nominal GDP for the same period grew by 8.9 per cent to Rs 153.91 lakh crore.

Fiscal Deficit Update

The government's fiscal deficit for the April-October period of FY24-25 reached Rs 7.50 lakh crore, representing 46.5 per cent of the full-year target. This is marginally higher than the 45 per cent reported during the same period in FY23-24, according to data from the Controller General of Accounts (CGA). 

D K Srivastava, Chief Policy Advisor at EY India, said, "Led by a significant slowdown in the main industrial sectors namely manufacturing, mining and quarrying, electricity, gas and water supply, and construction, Q2FY25 GVA growth has fallen to a seven-quarter low of 5.6 per cent. On the demand side, two domestic demand components namely private final consumption expenditure and gross fixed capital formation together account for a fall of 1.5 per cent points which nearly fully explains the fall in the GDP growth from 6.7 per cent in Q1FY25 to 5.4 per cent in Q2FY25."