India's Q2 GDP: Growth slows to 5.4% in July-September quarter

India’s economic growth slowed to 5.4% in the July-September quarter of 2024, sharply lower than the 8.1% expansion recorded in the year-ago period, government data released on Friday showed. The GDP growth figure for Q2 fell short of market expectations, as a recent Reuters poll of 54 economists had forecast the world’s fastest-growing major economy to expand by 6.5% year-on-year during the July-September period.

The growth in the first half of the current fiscal (April-September 2024) moderated to 6%, compared to 8.2% in the same period a year ago, according to the data released by National Statistics Office (NSO).

India is still, however, among the fastest growing major economies with government officials and several economists forecasting a potential regaining of momentum in the second half of the fiscal year, reported Reuters.

Real gross value added (GVA) rose by 5.6% in Q2, compared to a 7.7% increase in the year-ago period. Despite subdued performance in manufacturing and mining, the real GVA for the first half (April-September) of FY 2024-25 expanded by 6.2%.

The manufacturing sector grew by a modest 2.2% in Q2, while mining and quarrying contracted marginally by 0.1%. However, the agriculture and allied sector provided a bright spot, registering 3.5% growth after a series of sub-par performances over the last four quarters.

The construction sector also showed resilience, with sustained demand for finished steel driving a growth rate of 7.7% in Q2 and 9.1% in H1 of FY 2024-25. The services sector, which includes trade, hotels, transport, and communication, grew by 7.1% in Q2, up from 6.0% in the year-ago period.

Private final consumption expenditure (PFCE), a key indicator of consumer demand, saw robust growth of 6.0% in Q2 and 6.7% in H1, significantly higher than the 2.6% and 4.0% growth rates observed in the corresponding periods last year.

On a nominal basis, GVA grew by 8.1% in Q2, compared to 9.3% growth in the same period of the last fiscal.