New Delhi: India’s gross domestic production growth slowed down to 6.7 percent during April-June period this year, the first quarter of the current financial year ending in March next year. This is the slowest growth rate in five quarters (15 month period) as agriculture and services sectors pulled down the economic growth despite improvement in manufacturing, construction, and electricity-water and other utility services, showed the latest official numbers released Friday evening.
India is one of the fastest growing emerging economies in the world and has maintained above 8 percent average growth during the last four quarters.
Though the Reserve Bank of India had predicted a slowdown in the growth owing to muted government expenditure due to national elections held in April to June period this year but it had predicted the Q1 GDP growth to be above one percent but the initial data released Friday showed that it is lower by 40 basis points from the Reserve Bank’s forecast.
The official data showed that the Real GDP or GDP at Constant Prices in Q1 of 2024-25 is estimated at Rs 43.64 lakh crore, against Rs 40.91 lakh crore during the same quarter of the last financial year, which shows a growth rate of 6.7 percent.
While the nominal GDP or GDP at Current Prices in Q1 of 2024-25 is estimated at Rs 77.31 lakh crore, against Rs 70.50 lakh crore during the same period last year, showing a growth rate of 9.7 percent.
The data showed that the year-on-year growth for the primary sector during the first three months of the current financial year declined from 4.2 percent to just 2.7 percent in comparison with the growth during the same period last year.
Primary sector includes agriculture, livestock, forestry and fishing, and also mining and quarrying.
While the secondary sector, which includes manufacturing, construction, and utility services such as electricity, gas, water supply and other utility services showed a robust growth of 8.4 percent in the first quarter of this fiscal as against the growth of just 5.9 percent during the same period of last fiscal.
In case of the tertiary sectors of the economy which mostly includes services such as trade, hotels, transport, communication, financial, real estate and professional services and also public administration and defence services among other things, registered a slowdown in the growth from 10.7 percent to 7.2 percent in the first quarter this year in comparison with the same period in the last fiscal.
Poor showing of farm sector
Among all the major sectors of the economy, farming, forestry and farming sector registered the slowest growth at 2 percent in the first quarter this year as against the growth of 3.7 percent recorded during the same period last year.
It is a cause of concern for the government and policy makers as in a country like India where majority of the people still rely on the farm sector for their livelihood, such a sharp deceleration of growth may further complicate the situation.
On the other hand, mining and quarrying sector showed an almost flat growth rate of 7.2 percent during the first quarter this year as against the growth of 7 percent during the same period last year.
Manufacturing-construction a bright spot
India’s manufacturing sector which has historically grown below the services sector has done well during the first quarter. While the overall growth of the secondary sector has been estimated 8.4 percent in the first quarter as against the growth of 5.9 percent during the same period last year, manufacturing sector’s growth has improved from 5 percent to 7 percent during the same period last year.
Similarly, the growth in the construction sector has improved from 8.6 percent to 10.5 percent in the first quarter on the year-on-year basis.
The sharpest growth has been recorded in the utility services sector which includes electricity, gas, water supply and other utility services as it jumped from just 3.2 percent during the same period last year to 10.5 percent in the first quarter of this financial year.
Tertiary sectors slow down
The third sector of Indian economy, which includes services such as trade, hotels, transport, communication, financial, real estate and professional services and also public administration and defence services showed a deceleration in the first quarter this year as the growth declined from 10.7 percent during the same period last year to 7.2 percent this year.
Of the three components of this sector, two have registered a deceleration. For example, the growth in trade, hotels, transportation and communication related services declined to just 5.7 percent in the first quarter this year as against the growth of 9.7 percent during the same period last year.
Similarly, the growth rate in the financial, real estate and professional services declined from 12.6 percent to 7.1 percent in the first quarter of this financial year on the year-on-year basis.
While on the other hand, public administration, defence and other services recorded a marginal growth as these services registered a growth rate of 9.5 percent during the first quarter this year as against the growth of 8.3 percent during the same period last year.
