India's economic growth slows to 5.4 per cent in Q2 FY25

India's real economy grew at slower than expected pace of 5.4 per cent in the second quarter of the current financial year, the slowest in the previous seven quarters.

The country’s gross domestic product at constant prices stood at an estimated Rs44.10 lakh crore in Q2 of FY25, showing a growth of 5.4 per cent from Rs41.86 lakh crore in Q2 of FY24, which had grown at 8.1 per cent.

GDP in real terms grew at an annual rate of 6.7 per cent in the previous quarter and 8.1 per cent in the second quarter of the previous fiscal.

GDP at current prices in Q2 of 2024-25 is estimated to have grown at a rate of 8 per cent to Rs76.60 lakh crore, from Rs70.90 lakh crore in Q2 of 2023-24.

GDP at constant prices grew at 6 per cent to an estimated Rs87.74 lakh crore in H1 of FY25 (April-September) against Rs82.77 lakh crore in H1 of 2023-24.

GDP at current prices in H1 of FY25 has grown by 8,9 per cent to an estimated Rs153.91 lakh crore, against Rs141.40 lakh crore in H1 of FY24.

Gross value added (GVA) in real terms has grown by 5.6 per cent to Rs40.58 lakh crore in Q2 of FY25 against a growth of 7.7 per cent to Rs38.42 lakh crore in Q2 of the previous financial year.

Nominal GVA in Q2 of FY25 is estimated to have grown at a rate of 8.1 to Rs69.54 lakh crore from Rs64.35 lakh crore in Q2 of FY24, which in turn had grown at 9.3 per cent..

The 5.4 per cent growth in Q2 FY25 comes on the back of a 3.5 per cent growth in agriculture and related sector in Q2 of FY25 against growth rates ranging from 0.4 per cent to 2 per cent in the previous four quarters.

A 7.7 per cent growth in the construction sector in Q2 FY25 and 9.1 per cent growth in H1 FY25 helped sustain domestic consumption of finished steel.

Tertiary sector grew at a rate of 7.1 per cent in Q2 of FY25 against a growth of 6 per cent in Q2 of the previous financial year. Sectors, including trade, hotels, transport, communications and broadcasting services showed a growth of 6 per cent in Q2 of FY25 against a growth of 4.5 per cent in Q2 of FY24.

Growth in consumption in terms of private final consumption expenditure (PFCE) grew at 6 per cent and 6.7 per cent, respectively in Q2 and H1 of FY25 compared with the growth rate of 2.6 per cent and 4 per cent in Q2 and H1 of the previous financial year.

Government final consumption expenditure (GFCE) grew at 4.4 per cent, bouncing back from negative or low growth rates in previous three quarters.

India’s economy could see further dampening in growth on the back of slower earnings growth in exports and a record outflow of foreign money invested in the secondary market that resulted in foreign exchange outflows of nearly $12 billion from the country in October.