New Delhi, Aug 30 (Mayank Nigam) India’s gross domestic product (GDP) growth slowed down to five-quarter low of 6.7% in April-June quarter (Q1) of current financial year 2024-25 but the country remained the fastest-growing major economy globally. Election related disruptions and heatwaves during the June quarter seem to have taken a toll on economic growth during the period under review. “Real GDP (gross domestic product) or GDP at constant prices in Q1 of 2024-25 is estimated at Rs 43.64 lakh crore, against Rs 40.91 lakh crore in Q1 of 2023-24, showing a growth rate of 6.7%,” said Ministry of Statistics & Programme Implementation (MoSPI) in a statement.
As per the official data, nominal GDP or GDP at current prices in Q1 of 2024-25 is estimated at Rs 77.31 lakh crore, against Rs 70.50 lakh crore in Q1 of 2023-24 showing a growth rate of 9.7%. Real GVA (gross value added) grew by 6.8% in Q1 of 2024-25 over the growth rate of 8.3% in Q1 of the previous financial year. “This GVA growth in the Q1 of FY 2024-25 has been driven by significant growth in the secondary sector (8.4%), comprising of construction (10.5%), electricity, gas, water supply & other utility services (10.4%) and manufacturing (7.0%) sectors,” MoSPI said. Commenting on GDP data, ICRA chief economist Aditi Nayar said, “The higher-than-expected growth in the GVA in Q1 FY2025, as well as the acceleration in the same vis-à-vis Q4 FY2024 was largely led by construction, public administration, defence and other services, and agriculture segments.
The acceleration in the construction GVA growth, to 11.6% in Q1 FY2025 from 8.5% in Q4 FY2024, is particularly surprising given that the volume growth in construction-related indicators such as cement and steel output, or infra/construction goods output from the IIP (Index of Industrial Production), had slowed between these quarters. Besides, the capex of the Centre and the states had also contracted quite sharply in Q1 FY2025.” The MoSPI data showed farm sector growth decelerated to 2% during the June quarter as against 3.7% in the same quarter last year. Manufacturing sector logged 7% growth in the Q1 of the current fiscal as compared to 5% in the corresponding period last year. The ‘trade, hotels, transport and communications and services related to broadcasting grew at 5.7% in the June quarter of FY25 as against 9.7% in the same quarter last year. The financial, real estate and professional services grew by 7.1% in Q1 of FY25 as against 12.6% in the corresponding period of previous fiscal.
“Muted services growth is largely attributable to the disruptive effects of Lok Sabha elections manifested in high-frequency indicators and the intense heat wave witnessed this year,” said Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings. Meanwhile, Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) at constant prices witnessed growth rates of 7.4% and 7.5% respectively in the June quarter of the current financial year. Net taxes, at current prices, observed the growth rate of 8% in Q1 of FY25 resulting in 0.1% point gap between the growth rates of GVA and GDP. “Despite the moderation in the previous quarter, India maintains its position as the fastest-growing major economy, outpacing China’s 4.7% GDP growth in the same quarter. This resilience underscores India’s robust macroeconomic fundamentals. Looking ahead, there are promising signs for recovery in the coming quarters. An improved monsoon is expected to boost rural demand, while public and private capital expenditure is anticipated to gain momentum with stable policy continuity in sight,” said Arsh Mogre, Economist Institutional Equities, PL Capital – Prabhudas Lilladher.