India’s economic momentum has decelerated, with GDP growth slipping to 5.4% in the second quarter of FY 2024-25, compared to 8.1% in the same period last year, according to data released on November 29, 2024, by the National Statistical Office (NSO). The slowdown reflects challenges from global economic uncertainties, including rising inflation and geopolitical tensions.
Real Gross Value Added (GVA) growth also moderated to 5.6% from 7.7% in Q2 2023-24. The nominal GVA growth rate dipped to 8.1%, as opposed to 9.3% in the previous year. Despite these trends, the agriculture, livestock, forestry, and fishing sector emerged as a bright spot, recording 3.5% growth, a notable increase from 1.7% last year.
Industry analysts attribute the reduced pace to subdued private consumption and investment. “The Indian economy is facing headwinds from inflationary pressures and weak rural demand. Global uncertainties, including the Middle East conflict and high crude oil prices, have further impacted growth,” stated Madan Sabnavis, Chief Economist at Bank of Baroda.
The Reserve Bank of India (RBI) remains cautiously optimistic, maintaining its GDP growth projection for FY 2024-25 at 6.5%. RBI Governor Shaktikanta Das highlighted, “India’s growth trajectory is still robust compared to many global economies, but inflationary trends and external shocks warrant close monitoring.”
Despite the slowdown, experts emphasize India’s long-term growth potential, driven by structural reforms and a focus on manufacturing and infrastructure. Meanwhile, sectors such as mining and construction have faced contraction, signaling the need for policy interventions to boost industrial growth.
As India navigates these economic challenges, the focus will remain on balancing inflation control with growth stimulation to sustain its position as one of the world’s fastest-growing major economies.
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