November 30, 2024 – India’s GDP growth rate decline in the second quarter of this financial year (FY) delivers a telling blow on the economic front. The GDP growth rate slowed down to 5.4%, marking a two-year low. A year ago, the growth rate for the same quarter was 8.1%. A survey of 17 economists had projected an average GDP growth of 6.5% for this fiscal year.

According to official data, the manufacturing sector performed the worst in the July-September quarter of the current fiscal year. The disappointing figures come on the back of high inflation, soaring real estate costs and high borrowing costs.

In the first seven months itself, the government's fiscal deficit (which is the gap between spending and revenue) for fiscal year 2024-25 reached 46.5% of its full-year target. The Controller General of Accounts (CGA) data shows fiscal deficit between April to October at Rs 7,50,824 crore.

In the Union Budget, a fiscal deficit for the current fiscal year 2024-25 had been fixed at 4.9% of GDP

Despite the GDP growth rate decline this quarter, growth in the services and agriculture sectors indicates that some important areas have effectively managed to gain impetus. This raises hopes of better economic performance in the coming months.

Economists are not alarmed and say growth is likely to pick up during the second half of the fiscal year and that the Indian economy is gradually moving back to its long-term potential growth. 

With Media Inputs