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Informist, Friday, Dec. 6, 2024

 

--Sitharaman: Expect Oct-Dec econ activity to compensate for last 2 qtrs 
--CONTEXT: Sitharaman's comments at India-Japan Forum, 2024 
--Sitharaman: India's purchasing power rising but wages saturating 
--Sitharaman: Exports a matter of concern as global demand plateauing 

 

NEW DELHI – Finance Minister Nirmala Sitharaman on Friday expressed confidence that the pickup in economic activity in Oct-Dec due to better public expenditure will likely compensate the growth slowdown in the first two quarters of 2024-25 (Apr-Mar). India's GDP growth has been slowing down for the last three quarters and slumped to a seven-quarter low of 5.4% in Jul-Sept from 6.7% in Apr-Jun.
 

"I expect quarter three to make up for all this. The growth number is something which is not going to necessarily get badly affected," Sitharaman said at the India-Japan Forum 2024, organised by the Ananta Centre in New Delhi. "I would think there are very good chances, not just for this year but for the next year as well and the year after that also, for India to remain the fastest growing economy." 

 

India's growth was slow in the first two quarters as public expenditure was put on the back burner on account of the Lok Sabha election, Sitharaman said. The GDP growth in Apr-Jun was not as alarming as that of Jul-Sept as the economic activity in Jan-Mar had some impact on the first quarter, she said. "Quarter one's (Apr-Jun) emphasis on running the election through, had a bearing on quarter two (Jul-Sept)."

 

Sitharaman's comments come moments after the Reserve bank of India cut its growth projection for 2024-25 (Apr-Mar) to 6.6% from 7.2%. 

The plateauing global demand that hit India's exports also affected domestic growth, Sitharaman said. "Purchasing power of Indians is improving, but within India, you also have concerns of wages saturating. We are quite seized of these factors which might have a play on India's own consumption." But lower public expenditure was the main reason for slower growth, the finance minister said.  

 

In Apr-Sept, the government spent only 37.3% of its capital expenditure target of INR 11.11 trillion for FY25. The capital spending during the first six months was 15.4% lower than the corresponding period of FY24. This was partly due to the Model Code of Conduct for the Lok Sabha election.

 

The finance ministry's Economic Survey has estimated India's GDP growth to be 6.5-7.0% for the current fiscal year.  End

 

Reported by Krity Ambey

Edited by Saji George Titus

 

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