🔍 Summary:

India’s economy has hit a seven-quarter low, with real GDP growth slowing to 5.4% in Q2 FY2024-25 (July–September). This figure is significantly below projections from both the Reserve Bank of India (RBI) and independent economists. While some sectors like Agriculture and Services showed resilience, Manufacturing and Mining took a hard hit.

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📊 Key Economic Highlights

• Q2 GDP Growth (2024-25): 5.4%, down from 6.7% in Q1

• Gross Value Added (GVA) in Q2: 5.8%, down from 6.8%

• RBI’s Q2 GDP Estimate: 7%

• GDP Growth in Q2 FY2023-24: 8.1%

• GVA Growth in Q2 FY2023-24: 7.7%

These numbers indicate that India’s economy is growing at its slowest pace since the pandemic-induced slump, raising concerns for investors, policymakers, and consumers alike.

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🔍 Sector-Wise Breakdown

📉 Industries That Slowed Down

• Manufacturing: Drastically fell to 2.2%, from 14.3% in Q2 FY24

• Mining & Quarrying: Contracted -0.1%, from a strong 11.1% growth last year

• Construction: Grew by 7.7%, but down from 13.6%

• Electricity, Water & Utilities: Up 3.3%, versus 10.5% last year

• Gross Fixed Capital Formation (Investments): Slowed to 5.4% from 7.5% in Q1

📈 Sectors That Performed Well

• Agriculture, Forestry & Fishing: Grew 3.5%, up from 1.7% last year

• Public Administration & Defence: GVA rose 9.2%, from 7.7%

• Trade, Hotels, Transport & Communication: Improved to 6.6% from 4.5%

• Financial & Real Estate Services: GVA grew 6.7%, slightly better than last year

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📉 Reasons Behind the Economic Slowdown

🏭 Manufacturing Weakness

According to Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, the dip is largely due to poor corporate earnings and a sluggish manufacturing sector. This is concerning since manufacturing forms a key pillar of India’s economic engine.

🛒 Declining Urban Demand

The Chief Economic Adviser, V. Anantha Nageswaran, attributes the Q2 slowdown to cooling urban demand, which he believes is a temporary trend.

📉 Centre’s Investment Expenditure Falls

As per EY India’s D.K. Srivastava, the Centre’s capital spending contracted by 15.4%, affecting infrastructure and industrial growth. This significant decline is seen as a major reason for the overall GDP slowdown.

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📈 Consumption & Investment: Mixed Signals

• Private Final Consumption Expenditure (PFCE): Grew 6% in Q2, up from 2.6% a year ago but lower than Q1’s 7.4%

• Gross Capital Formation: Down from Q1, showing signs of sluggish investment appetite

• Public Investment: A notable contraction, hurting infrastructure and capital goods sectors

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🗓️ What to Expect in the Second Half of 2024-25?

To meet the RBI’s full-year GDP target of 7.2%, India will require a sharp rebound in H2. Current data shows only 6% growth in the first half (H1), which is the slowest in over a year.

The festival season and potential policy measures could improve demand and boost Q3 and Q4 growth.

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🧠 Expert Opinions

“These are initial estimates. We should not panic. The second half could recover,” – V. Anantha Nageswaran, Chief Economic Adviser

“Manufacturing was the hardest hit. The overall GDP could slip 1% below RBI’s estimate,” – Upasna Bhardwaj, Kotak Mahindra Bank

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🔚 Conclusion: Is India’s Growth Story in Danger?

While the sharp drop in GDP growth to 5.4% in Q2 is a red flag, it’s too early to draw long-term conclusions. The services sector remains resilient, and agriculture has shown a positive turnaround. A full recovery will depend on reviving investments, government expenditure, and private consumption in the coming quarters.

Investors, policymakers, and entrepreneurs should monitor the upcoming budget, festive season sales, and global macroeconomic conditions closely.