India’s economic growth witnessed a slowdown in the third quarter (October-December) of the 2024-25 fiscal year, registering a 6.2% expansion, as per the latest data released by the National Statistical Office (NSO). This marks a significant deceleration compared to the 9.5% growth recorded in the same period a year ago. The dip was primarily attributed to sluggish performance in the manufacturing and mining sectors.
A Gradual Cooling Off?
Despite a strong start earlier in the fiscal year, India’s GDP growth has moderated in recent quarters. The economy expanded at 5.6% in the July-September quarter before inching up to 6.2% in Q3. While this reflects resilience in the face of global uncertainties, the fading momentum raises questions about the trajectory for the coming quarters.
The NSO, in its second advance estimate of national accounts, has pegged the overall growth rate for 2024-25 at 6.5%, slightly improving upon its initial forecast of 6.4% made in January.
Revised Estimates Paint a Brighter Picture
In a notable revision, the NSO adjusted the GDP growth rate for 2023-24 to 9.2%, up from the earlier estimate of 8.2%. This revision indicates that the Indian economy may have been on a stronger footing than previously believed, possibly providing some cushion against the recent slowdown.
Key Factors Behind the Slowdown
- Manufacturing Woes: The sector has struggled with subdued demand and high input costs, impacting overall industrial output.
- Mining Sector Slump: Weak performance in mining has dragged down the overall GDP numbers.
- Global Headwinds: Ongoing geopolitical tensions and fluctuating commodity prices continue to exert pressure on economic growth.
Looking Ahead: Can India Maintain its Growth Momentum?
While the slowdown in Q3 raises concerns, the projected 6.5% growth for FY25 still reflects a stable economic outlook. Policymakers will likely focus on reviving industrial output, boosting domestic consumption, and attracting foreign investment to sustain growth momentum.
With key sectors showing mixed signals, all eyes will be on the upcoming policy measures and global economic trends that will shape India’s growth trajectory in the months ahead. Will India regain its pace, or is this a sign of a more prolonged slowdown? The next few quarters will be crucial in answering that question.
