India's gross domestic product grew at the slowest pace in seven quarters, led by slower growth across the industrial sector.
The gross domestic product grew 5.4% in the July-September quarter, compared to 6.7% in the April-June quarter, according to the latest estimates released by the government's statistical office on Friday. Gross Value Added, which strips out indirect tax and subsidies, is estimated to have grown 5.6%, compared to 6.8% in the preceding quarter.
On a nominal basis, GDP grew by 8%.
GDP was estimated to grow 6.5% in the second quarter, according to economists polled by Bloomberg. GVA growth was pegged at 6.3%.
The growth is also slower than the Reserve Bank of India's estimate of 7%.
“The sharply lower than expected GDP figures reflects the highly disappointing corporate earnings data, Upasna Bhardwaj, chief economist at Kotak Mahindra Bank said. The manufacturing sector appears to have taken the maximum beating, she said, adding that high frequency data suggests that festive linked revival in activity may provide a marginally better H2 growth figure but overall GDP growth for FY25 is going to be around 100 basis points lower than RBI’s estimate of 7.2%. "Despite the sharp slowdown in GDP growth we maintain our view of a pause by the RBI next week given elevated inflation and uncertain global environment,” she said.
"With the current slowdown, we continue to expect RBI to deliver its first rate cut in February amidst a moderating inflation scenario," Suman Chowdhury, chief economist at Acuité Ratings. For the coming quarters, distribution of the planned capex, as well as solid support from the agricultural sector, will help ride out some of the drag on the economy as it grows below its potential rate, he said, adding that it’s a waiting game for now.
Key Highlights (Year-on-Year Growth)
Agriculture GVA grew 3.5% in Q2 vs 2% in Q1.
Mining contracted 0.1% in Q2, vs 7.2% in Q1.
Manufacturing expanded 2.2% vs 7% in Q1.
Electricity and other public utilities grew 3.3% in Q2 versus 10.4% in Q1.
Construction grew 7.7% in Q2 vs 10.5% in Q1.
Trade, hotels, transport, and communication expanded 6% in Q2 vs 5.7% in Q1.
Financial services sector grew 6.7% in Q2 vs 7.1% in Q1.
Expenditure-Wise Trends
Private Final Consumption Expenditure grew 6% in Q2 vs 7.4% in Q1
Government Final Consumption Expenditure rebounded to a growth rate of 4.4% after observing either negative or low growth rates in the previous three quarters, the government said.
Capex grew by 5.4% in Q2, compared to 7.5% in Q1 FY25.
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