Data Alert
India Jul-Sept GDP growth shocks, slumps to 7-quarter low of 5.4%
This story was originally published at 17:58 IST on 29 November 2024
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--India Jul-Sept GDP growth 5.4% vs 8.1% year ago
--Informist poll estimated India Jul-Sept GDP growth at 6.5%
--India Jul-Sept GDP growth of 5.4% lowest in 7 quarters
--India Jul-Sept GVA growth 5.6% vs 7.7% year ago
--India Jul-Sept farm sector growth 3.5% vs 1.7% year ago
--India Jul-Sept mining sector growth -0.1% vs 11.1% year ago
--India Jul-Sept manufacturing sector growth 2.2% vs 14.3% year ago
--India Jul-Sept construction sector growth 7.7% vs 13.6% year ago
--India Jul-Sept nominal GDP growth 8.0% vs 9.6% year ago
--India Apr-Sept GDP growth 6.0% vs 8.2% year ago
--India Apr-Sept GVA growth 6.2% vs 8.0% year ago
--India Apr-Sept nominal GDP growth 8.9% vs 9.0% year ago
--India Jul-Sept industry growth 3.6% vs 13.6% year ago
--India Jul-Sept services growth 7.1% vs 6.0% year ago
--India Jul-Sept pvt consumption expenditure growth 6.0% vs 2.6% year ago
--India Jul-Sept govt consumption expenditure growth 4.4% vs 14.0% year ago
--India Jul-Sept gross fixed capital formation growth 5.4% vs 11.6% year ago
NEW DELHI - India's GDP growth fell sharply to a seven-quarter low of 5.4% in the quarter ended September due to a slump in the growth of industrial activity, data released by the National Statistical Office on Friday showed. The Indian economy had grown 8.1% a year ago and 6.7% a quarter ago.
The GDP print was sharply below expectations. According to an Informist poll, GDP growth was seen slowing to 6.5% in Jul-Sept. GDP growth in Jul-Sept was also much lower than the Reserve Bank of India's projection of 7.0%.
Along with the headline print, the gross value added growth, which economists consider a more reliable indicator of economic activity than GDP, also slowed down to a seven-quarter low of 5.6% in Jul-Sept from 7.7% a year ago.
"The sharply lower than expected GDP figures reflect the highly disappointing corporate earnings data. The manufacturing sector appears to have taken the maximum beating," Kotak Mahindra Bank Chief Economist Upasna Bhardwaj said.
Industry grew just 3.6% in Jul-Sept, a six-quarter low, as compared to 13.6% a year ago, and 8.3% a quater ago. Within the industry sector, manufacturing sector grew just 2.2% in Jul-Sept as compared to 14.3% a year ago. Activity in the mining sector contracted 0.1% in Jul-Sept as compared to an expansion of 11.1% in the same period last year.
Industry alone dragged down GDP growth in Jul-Sept, with the other two broad sectors--agriculture and services--rising faster than last year. The services sector grew 7.1% in Jul-Sept as compared to 6.0% a year ago, and 7.2% a quarter ago. Farm sector growth was at a five-quarter high of 3.5% in Jul-Sept as against 1.7% a year ago.
On the demand side, private consumption grew 6.0% in Jul-Sept, higher than 2.6% a year ago, but lower than the 7.4% a quarter ago. "Consumption growth slowed probably due to a moderation in urban demand as seen in high frequency indicators," HDFC Bank Principal Economist Sakshi Gupta said.
Government consumption remained a drag last quarter even as it improved from the previous quarter. Government consumption grew 4.4% in Jul-Sept as compared to 14.0% a year ago and (-)0.2% in Apr-Jun. Capital formation expanded 5.4% in Jul-Sept, lower than 11.6% a year ago, and 7.5% a quarter ago.
"Today's print presents downside risk to our full year forecast which could now come in closer to 6.5?ter assuming a pickup in momentum in Oct-Mar," Gupta said. The RBI projects full year GDP growth at 7.2% for 2024-25 (Apr-Mar).
Economists said that despite the sharp growth slowdown in Jul-Sept, the central bank's Monetary Policy Committee may still leave the repo rate unchanged next week because of high inflation. "Despite the sharp slowdown in GDP growth we maintain our view of a pause by the RBI next week given elevated inflation and uncertain global environment," Bhardwaj of Kotak Mahindra Bank said.
The following table shows quarterly growth in gross value added at basic prices and GDP for Jul-Sept and previous quarters:
| Sector | 2024-25 | 2023-24 | ||||
| Jul-Sept | Apr-Jun | Jan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | |
| Agriculture | 3.5% | 2.0% | 0.6% | 0.4% | 1.7% | 3.7% |
| Industry | 3.6% | 8.3% | 8.4% | 10.5% | 13.6% | 6.0% |
| Mining | (-)0.1% | 7.2% | 4.3% | 7.5% | 11.1% | 7.0% |
| Manufacturing | 2.2% | 7.0% | 8.9% | 11.5% | 14.3% | 5.0% |
| Power and gas | 3.3% | 10.4% | 7.7% | 9.0% | 10.5% | 3.2% |
| Construction | 7.7% | 10.5% | 8.7% | 9.6% | 13.6% | 8.6% |
| Services | 7.1% | 7.2% | 6.7% | 7.1% | 6.0% | 10.7% |
| Trade, hotels | 6.0% | 5.7% | 5.1% | 6.9% | 4.5% | 9.7% |
| Financial services | 6.7% | 7.1% | 7.6% | 7.0% | 6.2% | 12.6% |
| Other services | 9.2% | 9.5% | 7.8% | 7.5% | 7.7% | 8.3% |
| GVA | 5.6% | 6.8% | 6.3% | 6.8% | 7.7% | 8.3% |
| GDP | 5.4% | 6.7% | 7.8% | 8.6% | 8.1% | 8.2% |
The following table details the annual GDP growth (in %) in recent years as per the new series:
|
Year |
Growth rate |
|
2023-24 |
8.2% |
|
2022-23 |
7.0% |
|
2021-22 |
9.7% |
|
2020-21 |
(-)5.8% |
|
2019-20 |
3.9% |
|
2018-19 |
6.5% |
|
2017-18 |
6.8% |
|
2016-17 |
8.3% |
|
2015-16 |
8.0% |
|
2014-15 |
7.4% |
|
2013-14 |
6.4% |
|
2012-13 |
5.5% |
End
Reported by Shubham Rana
Edited by Vandana Hingorani
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