Big blow to the economy, country's GDP falls to a two-year low

Economy of India: India's economic growth rate was recorded at 5.4% in the July-September quarter of the current financial year 2024-25, the lowest in the last two years. This decline is mainly due to the weak performance of the manufacturing sector. According to data released by the National Statistical Office (NSO) on Friday, this growth rate was 8.1% in the same quarter a year ago.

Growth at the lowest level in recent years

The GDP growth rate in this quarter is the lowest since the October-December quarter of 2022-23, when it was 4.3%. However, India still remains the fastest growing major economy in the world. In comparison, China's GDP growth rate was 4.6% in the same period.

Manufacturing sector disappointed

According to NSO data, the growth rate of the manufacturing sector declined to 2.2%, from 14.3% a year ago. This decline became the main reason for the decline in economic growth. In contrast, the agricultural sector saw improvement. The growth rate of the agriculture sector was 3.5%, while it was only 1.7% in the same period last year.

Economic picture of the first half

The GDP growth rate averaged 6% in the first half of the current financial year, while it was 8.2% in the first half of the previous financial year. The growth rate was 6.7% in the first quarter of FY 2024-25, which declined to 5.4% in the second quarter.

Fiscal deficit reached 46.5%

The fiscal deficit has reached 46.5% of the full year target in the first seven months (April-October) of the current financial year. According to the Controller General of Accounts (CGA), the deficit during this period was Rs 7,50,824 crore. This figure was 45% in the same period of FY 2023-24.

The government has set a target to limit the fiscal deficit to 4.9% of GDP for 2024-25. For this, the estimated limit has been set at Rs 16,13,312 crore.

What is the way forward?

Although the decline in India's economic growth rate is a matter of concern, the country still maintains its position among the major global economies. Reforms in the agricultural sector and efforts to control the fiscal deficit are expected to revive the economy in the coming quarters.

According to economic experts, the government will need policy reforms and incentives to improve the manufacturing sector and boost consumer demand. If these steps are taken on time, the Indian economy can regain its old momentum.