India’s economy recorded a 5.4% GDP growth for the second quarter (July-September) of the current fiscal year, according to data released by the Ministry of Statistics. Despite challenges in sectors like manufacturing, which saw a growth rate of just 2.2%, and mining, which contracted by 0.1%, the overall economic growth remains robust. The Real Gross Value Added (GVA) for the first half of FY 2024-25 stands at a commendable 6.2%, highlighting strong growth momentum.
Agriculture and allied sectors have shown recovery, posting a growth rate of 3.5% in Q2, following subdued growth in the previous four quarters. The construction sector also showed resilience, driven by sustained domestic consumption of steel, reporting growth rates of 7.7% and 9.1% in Q2 and H1, respectively.
The services sector, which remains a key driver of India’s economic growth, grew by 7.1% in Q2 of FY 2024-25, outperforming the 6% growth seen in the same period last year. Within services, segments like Trade, Hotels, Transport, Communication, and Broadcasting registered an impressive 6% growth in Q2, compared to 4.5% in Q2 of the previous fiscal year.
A strong indicator of economic recovery is the growth in Private Final Consumption Expenditure (PFCE), which rose by 6% in Q2 and 6.7% in H1 of FY 2024-25, up from 2.6% and 4% in the same periods last year. Given that private consumption accounts for 60% of India’s GDP, this acceleration suggests favorable future prospects for economic expansion.
Government Final Consumption Expenditure (GFCE) also bounced back, registering a growth of 4.4% after a slowdown in the previous quarter, attributed to the Lok Sabha elections.
India’s economic performance for the second quarter was better than China’s, which saw a growth of just 4.7% in the same period. Although India’s GDP growth had slowed to 6.7% in the first quarter due to reduced government spending during the elections, it still maintains its position as the world’s fastest-growing major economy.
Economists remain cautiously optimistic about India’s growth prospects. Easing inflation, expected improvements in the agricultural sector, and a pickup in government spending are all expected to support growth in the coming months. The Finance Ministry’s recent economic review suggests that India is well-positioned to continue its upward trajectory, driven by strong private consumption, government spending, and capital investment.
On the employment front, the formal workforce is expanding, with notable increases in manufacturing jobs and a strong inflow of youth into organised sectors, it added.
The Reserve Bank of India (RBI) has also maintained its GDP growth forecast for the current fiscal year at 7.2%.
“India’s growth story remains intact as its fundamental drivers – consumption and investment demand – are gaining momentum. Prospects of private consumption, the mainstay of aggregate demand, look bright on the back of improved agricultural outlook and rural demand.
“Sustained buoyancy in services would also support urban demand. Government expenditure of the Centre and the states is expected to pick up pace in line with the Budget Estimates. Investment activity would benefit from consumer and business optimism, the government’s continued thrust on capex and healthy balance sheets of banks and corporates,” RBI Governor Shaktikanta Das said.
(IANS)
