The slower-than-expected growth has alarmed economists, who are now adjusting their projections for the rest of the year. Upasana Bhardwaj, Chief Economist at Kotak Mahindra Bank, noted that the sharp decline in GDP growth reflects disappointing corporate earnings figures, particularly in the manufacturing sector, which is facing a slowdown. is lying
He said, “The much lower than expected GDP data reflects very disappointing corporate earnings data. The manufacturing sector seems to be the worst hit. High frequency data suggests that the festive-related recovery in activity may deliver a marginally better 2H growth figure, but overall GDP growth for FY25 is expected to be around 100bps lower than RBI’s estimate. 7.2 percent.
He added, “Despite the sharp slowdown in GDP growth, we expect the RBI next week in view of high inflation and an uncertain global environment.” maintain their view of a pause on behalf of,” Sujan Hajra, chief economist and executive director at Anand Rathi Shares and Stockbrokers. GDP data was also weighed in, noting that growth of 5.4 percent in Q2 was lower than both their own estimates (6.7 percent) and the Street’s. Estimates (6.5 percent).
He said, “This weakness in numbers was largely due to contrasts; among them, GDP growth was at a healthy 7.5 percent. On the manufacturing side, the industrial sector saw weak growth, while the services sector In, where we had expected 8 percent growth, a healthy but slightly lower expansion of 7.1 percent was recorded.
Agriculture, on the other hand, expanded at a stronger pace, as reflected by higher estimates for kharif output. We believe that growth in agriculture will continue to be strong in the second half (H2), which is expected to further boost rural demand and increase capital expenditure (Capex) by the central and state governments.
Additionally, a moderation in the industrial sector base should support robust growth, especially with a full monsoon season,” he added. However, some headwinds could affect our outlook, Hajra said. Risks include the potential impact of Chinese imports (“China dumping”) and policy uncertainty following the US election, both of which could dampen the recovery in private sector investment.
India’s GDP stood at Rs 44.10 lakh crore in the second quarter of the financial year 2024-25, up from Rs 44.10 lakh crore in the same quarter last year, official data released by the Ministry of Statistics and Program Implementation showed. 41.86 lakh crore in the month was over Rs. In Q2, India’s economy grew by 6.7% in Q1, which was lower than RBI’s forecast. 7.1 percent
As a result, several global rating agencies, including S&P Global Ratings, have revised their growth forecasts for India. The IMF and the World Bank have pegged India’s GDP growth at 7 percent in 2024-25, while the RBI had earlier forecast a growth of 7.2. Percentage
The RBI is optimistic about the medium-term outlook, pointing out that the slowdown seen in the second quarter is behind the economy. Private consumption, which is expected to boost domestic demand, is showing signs of recovery, boosted by festive season spending.
However, analysts remain cautious, with most predicting that India’s growth will be somewhat slower than initially forecast, given recent data trends.