India's real Gross Domestic Product growth for the July-September 2024 quarter slipped to a seven-quarter low of 5.4%, according to the National Statistics Office on Friday. That is down from 6.7% in the previous quarter and 8.1% during the same period last year. The slower growth in manufacturing, coupled with contraction in mining and quarrying, formed the main restraint on the decline in the GDP figures described as "disappointing but not alarming" by Chief Economic Advisor V. Anantha Nageswaran.
Manufacturing and Mining Weigh Down Growth
The manufacturing sector, that accounts for more than 17% of India's GVA, grew at a sluggish 2.2% during Q2, much softer than the 7% growth in Q1 or 14.3% in the corresponding period the previous year. Mining and quarrying contracted by a mere 0.1% due to prolonged rains compared with 7.2% growth in the previous quarter and 11.1% in the year-ago period.
Bright spots shone in both Agriculture and Construction.
Manufacturing and mining are still on the weak side, while agriculture and construction are a bit stronger. Agriculture growth was 3.5% in Q2. This compares with only 2% in Q1 and 1.7% in Q2 last year. Construction came out at 7.7%, which was lower than Q1 at 10.5% but actually stronger than Q2 the previous year at 13.6%.
Service and Consumption Trends
Services growth accelerated by 7.1%, below the 7.2% pace in Q1 but better than a 6% growth recorded in the same quarter a year ago. Private final consumption expenditure, proxy to consumer demand, expanded at 6% to ₹24.82 lakh crore. It was slower than a 7.4% expansion reported in Q1. While that did rebound from a contraction of 0.2 percent in Q1, it is a bit softer than the 14% recorded in Q2 last year. Meanwhile, government final consumption expenditure expanded 4.4%. According to C.E.A. Nageswaran, it is not something to worry about because this slowdown can be attributed to over capacity building in manufacturing and large spurt in imports which is having an adverse effect on domestic production. According to him, growth prospects will be beneficial due to policy measures like deregulation, increased public investment, and reforms in the private sector.
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