India's Q2 GDP slows to 5.4%, sharply lower than Reserve Bank estimates of 7%

New Delhi: The Indian economy grew by 5.4 per cent in real terms in the July-September quarter of the current financial year 2024-25, Ministry of Statistics and Programme Implementation's official data showed on Friday. The quarterly growth was quite lower than RBI's forecast of 7 per cent.

Real GDP in Q2 of 2024-25 is estimated at Rs 44.10 lakh crore, against Rs 41.86 lakh crore in Q2 of 2023-24, showing a moderate growth rate of 5.4 per cent.

Last year same quarter, India grew 8.1 per cent.

Indian economy grew 6.7 per cent in the April-June quarter, lower than RBI's 7.1 per cent forecast.

The RBI has pegged India's 2024-25 GDP growth at 7.2 per cent. IMF and World have pegged it at 7.0 per cent. Many global rating agencies and multilateral organizations have also revised their growth forecasts for India upwards.

In its latest monetary policy review meeting in October, RBI pegged Q2 growth forecast at 7.0 per cent; Q3 at 7.4 per cent; and Q4 at 7.4 per cent. Real GDP growth for Q1 of next financial year 2025-26 is projected at 7.3 per cent.

The Economic Survey tabled in Parliament earlier this year "conservatively" projected India's real GDP growth at 6.5-7 per cent for 2024-25, acknowledging that market expectations are higher. Real GDP growth is the reported economic growth adjusted for inflation.

S&P Global Ratings this Monday retained India's GDP forecast for the current financial year 2024-25 at 6.8 per cent while cutting economic growth forecasts for the next two years.
The Reserve Bank of India last week said that the weakness witnessed in the Indian economy, particularly in the recent quarter, is behind us.

The slack in speed in the Indian economy observed in the second quarter of 2024-25 (July-September) is behind us as private consumption is back to being the driver of domestic demand with festival spending lighting up real activity in October-December, RBI had said in its latest monthly bulletin.

The RBI asserted that the medium-term outlook remains bullish.

India's GDP grew by an impressive 8.2 per cent during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.