Winning Bizness Desk

Mumbai. India’s economy witnessed a significant slowdown in the July-September quarter of the current fiscal year, with GDP growth falling to 5.4%, the lowest in nearly two years. This decline is primarily attributed to the poor performance of the manufacturing sector, according to official data released on Friday. In comparison, the GDP growth rate in the same quarter last year was 8.1%.

The previous low was 4.3%, recorded during the October-December quarter of the 2022-23 fiscal year. Despite the slowdown, India continues to be the fastest-growing major economy, outperforming China, whose GDP growth stood at 4.6% in the July-September quarter of this year. The National Statistical Office (NSO) reported that the agriculture sector showed significant improvement, growing by 3.5% in the July-September quarter of 2024-25, compared to 1.7% growth during the same period last year. However, the manufacturing sector faced a steep decline, with its growth rate falling to 2.2%, a sharp drop from the 14.3% growth it recorded a year ago.

First-Half GDP Growth Moderates

The GDP growth for the first half of the current fiscal year was estimated at 6%, compared to 8.2% in the first half of the previous fiscal year. The GDP growth in the first quarter of the current fiscal year had remained steady at 6.7%.

Fiscal Deficit Reaches 46.5% of Annual Target

India’s fiscal deficit for the first seven months of the 2024-25 fiscal year reached 46.5% of the annual target, as per data from the Controller General of Accounts (CGA). During the April-October period, the deficit stood at Rs 7,50,824 crore. In comparison, the fiscal deficit for the same period in the previous fiscal year accounted for 45% of the annual budget estimate. The fiscal deficit represents the gap between the government’s revenue and expenditure. In the Union Budget, the government had projected a fiscal deficit of 4.9% of GDP for 2024-25, aiming to limit it to Rs 16,13,312 crore.

India’s status is as the fastest-growing major economy

While the decline in GDP growth raises concerns, India’s status as the fastest-growing major economy underscores its resilience. Analysts suggest that policy interventions and an improvement in manufacturing output could support a rebound in the coming quarters. However, maintaining fiscal discipline and stimulating key sectors like manufacturing will be crucial for sustaining economic momentum. This deceleration serves as a reminder of the challenges the Indian economy faces amid global uncertainties and domestic structural constraints. The government’s strategy to balance growth and fiscal prudence will be closely watched in the coming months.