India’s Gross Domestic Product (GDP) growth slowed to 5.4% in the second quarter (Q2) of FY 2024-25, marking a significant deceleration from 8.1% in the same period last year, and a drop from 6.7% in the April-June quarter of FY 2024-25.
According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday, the slower growth reflects continued challenges in key sectors such as Manufacturing and Mining & Quarrying, while some positive trends in agriculture, construction, and services offer optimism.
This is the lowest GDP growth rate in seven quarters — the last time India’s economy fell below this was in the third quarter of fiscal 2023.
Manufacturing and Mining Weigh on Growth
While India’s overall economic performance remained positive, key sectors like Manufacturing and Mining & Quarrying held back growth in Q2.
Manufacturing grew by just 2.2%, down from stronger performances in previous quarters.
Mining & Quarrying showed a contraction of -0.1%, highlighting continued challenges in the extraction and processing of minerals.
Despite these setbacks, the overall Real Gross Value Added (GVA) in the first half (April-September) of FY 2024-25 grew by 6.2%, indicating that other sectors of the economy are performing better than expected.
Real and Nominal GVA
For Q2 of FY 2024-25, Real GVA (at constant prices) grew by 5.6%, down from 7.7% in Q2 of FY 2023-24. Nominal GVA, reflecting current prices, grew by 8.1%, compared to 9.3% growth in the same quarter last year.
Private and Government Consumption Show Resilience
On the expenditure side, Private Final Consumption Expenditure (PFCE) showed solid growth, rising by 6.0% in Q2 and 6.7% in the first half of FY 2024-25. This represents a significant improvement over the 2.6% and 4.0% growth rates in Q2 and H1 of the previous fiscal year.
According to the release by MoSPI, “Private Final Consumption Expenditure (PFCE) has witnessed a growth rate of 6.0% and 6.7% respectively in Q2 and H1 of the FY 2024-25 over the growth rate of 2.6% and 4.0% in Q2 and H1 of the previous financial year.”
The Government Final Consumption Expenditure (GFCE) also rebounded, showing a growth of 4.4% in Q2, following low or negative growth rates in the previous three quarters. “Government Final Consumption Expenditure (GFCE) has rebounded to a growth rate of 4.4% after observing either negative or low growth rates in previous three quarters,” the release noted.
Sectoral Performance: Agriculture, Construction, and Services Shine
Several key sectors saw growth, contributing to overall economic stability:
Agriculture and Allied Sectors recorded a 3.5% growth in Q2 of FY 2024-25, reversing the subdued performance of the past year. The growth follows a period of weak growth rates ranging from 0.4% to 2.0% in previous quarters.
The Construction Sector showed a strong performance, driven by sustained domestic consumption of finished steel, growing by 7.7% in Q2 and 9.1% in the first half of FY 2024-25.
The Tertiary Sector, which includes services such as trade, hotels, transport, and communication, grew by 7.1% in Q2, up from 6.0% in the same period last year. “Tertiary sector has observed a growth rate of 7.1% in Q2 of FY 2024-25, as compared to the growth rate of 6.0% in Q2 of the previous financial year,” the MoSPI press release stated.
In particular, Trade, Hotels, Transport, Communication, and Services related to Broadcasting showed a growth rate of 6.0% in Q2, an improvement from 4.5% in the same period last year.
