India’s GDP growth rate slowed sharply to 5.4 percent in the July-September quarter, marking an 18-month low, according to data released by the National Statistics Office (NSO) on Friday. The figure significantly undershot the 6.5 percent growth forecast from a Reuters poll, reflecting a pronounced decline from the 6.7 percent growth in the April-June quarter and 8.1 percent in the same period last year.
Gross Value Added (GVA), a key measure of economic activity across sectors, grew by 5.6 percent, falling short of the 6.5 percent estimate. This marked a notable drop from 7.7 percent growth year-on-year and 6.8 percent in the preceding quarter.
Sectoral Performance of GDP: Manufacturing and Mining Drag Down Growth
The slowdown was evident across key sectors:
Agriculture: Provided a silver lining with a 3.5 percent growth rate, improving from 2 percent in the previous quarter and 1.7 percent last year.
Manufacturing: Slumped to 2.2 percent growth from 14.3 percent a year ago and 7 percent in Q1FY25, reflecting weakened industrial output.
Mining: Contracted by -0.1 percent, a significant downturn compared to 11.1 percent growth last year and 7.2 percent in Q1FY25.
Electricity: Slowed to 3.3 percent from 10.5 percent year-on-year and 10.4 percent in the previous quarter.
Construction: Grew by 7.7 percent, down from 13.6 percent a year earlier and 10.5 percent in Q1FY25.
Trade, Hotels, and Transport: Improved slightly to 6 percent, compared to 4.5 percent last year and 5.7 percent sequentially.
Public Administration and Services: Grew by 9.2 percent, higher than 7.7 percent last year but slightly below the 9.5 percent recorded in Q1FY25.
Outlook for H2 FY25
Despite the current slowdown in GDP growth, the second half of the fiscal year is anticipated to benefit from strong agricultural performance and higher public investment. Policymakers and analysts will closely monitor private sector demand and industrial recovery to assess long-term growth sustainability.
India’s economic momentum faces challenges, but a targeted focus on boosting manufacturing and infrastructure development could help mitigate these headwinds.
