The Ministry of Statistics and Programme Implementation released the GDP data for the July-September quarter for the FY 2024-25, real GDP is expected to grow at 5.4% in Q2 of FY24-25 compared to the growth rate of 8.1% of the FY2023-24. This is the slowest growth rate since Q3 2022-23.

Real GVA (Gross Value Added) has grown by 5.6% in Q2 of FY 2024-25, over the growth rate of 7.7% in Q2 of the previous financial year. Nominal GVA has witnessed a growth rate of 8.1% in Q2 of FY2024-25 over the growth rate of 9.3% in Q2FY 2023-24.

The sluggish performance and dip in GDP growth are attributed to the government's decline in capital expenditure in the current fiscal year. The centre’s capex in October 2024 stood at Rs 51,579 crore which is 10 per cent lower than the spend of Rs 56,296 crore in October 2023. Urban consumption also stagnated after the sharp spurt in the post-COVID period.  Shreya Sodhani, Regional Economist, Barclays also stressed the quarter had seen excess rainfall, lower government capex and weak urban demand. Sodhani mentioned in a research note that they expect the repo rate to be 6.5% in the upcoming MPC meeting in the first week of December.

However, many national and international banks had projected a lower growth rate for the FY 2024-25. The Reserve Bank of India projected the growth rate at 6.1-6,8% against its earlier projection of 7.2%. Similarly, Kotak Mahindra had estimated an expansion rate of 6.1% compared to the previous projection of 6.7%.  Care Edge ratings had projected the growth rate to 6.5% lowering from its earlier projection of 7%. QuantEco Research has cut its projections from 7% to 6.4%. Barclay's projection shows 6.5%, ICRA at 6.5-6.7% and CRISIL at 6.8%.

For the second quarter, the Agriculture and Allied Sector grew by 3.5%, the Construction sector by 7.7%, and domestic steel consumption of finished steel showed 9.1% growth. The Tertiary sector has observed a growth rate of 7.1%. In particular Trade, Hotels, Transport, Communications and Services related to Broadcasting have seen a growth rate of 6.0%.

The GDP growth rate is expected to pick up in the second half boosted by increased capital spending, food inflation is likely to moderate supported by healthy agricultural production. Experts are also wary about the credit slowdown led by regulatory measures. Moreover, US-economic policies will hit Indian imports as Trump is planning to impose a 100 per cent Tariff on BRICS if it creates a BRICS currency or plans to replace the US dollar. In the recent BRICS summit in Kazan, Russia Vladimir Putin accused the USA of weaponizing the dollar and pushed for a unified BRICS currency.