Reserve Bank of India Governor Shaktikanta Das said Saturday that the slowdown in India’s economic growth to 6.7% in the April-June quarter was largely due to reduced government spending during the Lok Sabha elections and the enforcement of the Model Code of Conduct (MCC) due to elections.
The RBI had initially projected a growth rate of 7.1% for the period.
“The Reserve Bank projected a growth rate of 7.1 per cent for the first quarter. However, the first advance estimation data released by the National Statistical Office showed the growth rate at 6.7 per cent,” Das told reporters in Odisha’s Bhubaneshwar.
Das explained that while major economic drivers like consumption, investment, manufacturing, services, and construction grew by more than 7%, two factors pulled down the growth rate: lower government expenditure and minimal growth in agriculture. Government spending was constrained by the elections, Das noted, but he anticipates it will increase in the coming quarters.
The agriculture sector grew only around 2% despite favourable monsoon conditions.
“Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 per cent projected by the RBI will be materialised in coming quarters,” the governor asserted.
India GDP in April-June for FY25
India’s economic growth fell to a 15-month low of 6.7% in the April-June 2024-25 quarter, primarily due to weak performance in the agriculture and services sectors, as against 8.2% growth rate during the same period in 2023-24, according to National Statistical Office (NSO) data.
Despite the slowdown, India remains the fastest-growing major economy, with China posting a 4.7% growth in the same period. The previous low was 6.2% in the January-March quarter of 2023.
“Real GDP or GDP at Constant Prices in Q1 of 2024-25 is estimated at Rs 43.64 lakh crore against Rs 40.91 lakh crore in Q1 of 2023-24, showing a growth rate of 6.7 per cent,” NSO said in a statement.
Aditi Nayar, Chief Economist, Head – Research and Outreach, ICRA, said, “We anticipate a back-end pickup in the GDP growth to above 7% in H2 FY2025, boosted by factors such as Government capex and pent-up rural demand during the festive months.”