India's Q1 GDP growth moderates to five-quarter low of 6.7%, misses RBI estimate

India's gross domestic product (GDP) growth moderated to 6.7% year-on-year in the first quarter or April-June period of financial year 2024-25, as per the data released by the government on Friday, August 30. This marked the slowest rate of growth in the last five quarters.

In the preceding March 2024 quarter, the Indian economy had grown by 7.8%, whereas it had accelerated by 8.2% in the April-June period of fiscal year 2023-24.

"Real GDP or GDP at Constant Prices in Q1 of 2024-25 is estimated at ₹43.64 lakh crore against ₹40.91 lakh crore in Q1 of 2023-24, showing a growth rate of 6.7%," the National Statistical Office (NSO) said in a statement.

The rate of growth in Q1FY25 is the lowest since January-March 2023, when the GDP had grown by 6.2%.

The numbers have also missed the estimate of the Reserve Bank of India (RBI). The central bank, in its recent monetary policy review meeting, had forecast the GDP to grow by 7.1% in Q1FY25.

Farm sector growth declines, manufacturing shines

The slump in GDP in the first quarter was mainly due to poor showing by the farm sector, according to the government data.

The agriculture sector recorded a 2% growth, down from 3.7% in the April-June quarter of 2023-24, as per the numbers released by NSO.

However, the growth in the manufacturing sector accelerated to 7% in the first quarter of the current fiscal compared to 5% in the year-ago period.

Notably, India continues to remain the fastest-growing major economy, as China's GDP growth in the April-June quarter was 4.7%.

Moody's revises India's growth forecast

On Thursday, August 29, Moody's raised India's GDP growth forecast for 2024 and 2025 calendar year to 7.2 per cent and 6.6 per cent, respectively, on strong broad-based growth.

The ratings agency said that the growth could be higher if the cyclical momentum, especially for private consumption, gains more traction.

"From a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation," Moody's Ratings said in its August update of Global Macro Outlook 2024-25.

As per the projections, India's GDP growth would be 7.2 per cent in 2024, up from 6.8 per cent previously. In 2025, the growth is estimated at 6.6 per cent versus our earlier estimate of 6.4 per cent.