GDP of India 2024 reflects a mix of challenges and prospects. The economy faced a slowdown in the first half of FY25, but there is optimism about a possible recovery in the second half. GDP of India 2024, the growth declined to 5.4% in the second quarter (Q2) of FY25, the lowest in nearly two years, mainly due to weak performance in the manufacturing and mining sectors. Despite this, analysts predict that rural demand, holiday spending, and more government expenditure will propel the rebound.
This article discusses the key trends, challenges, and opportunities shaping India’s economic outlook for FY25.
GDP Of India 2024: FY25- A Slow Start
The first half of FY25 saw a significant deceleration in economic growth. After growing 6.7% in Q1 FY25 and 8.1% in Q2 FY24, Q2 growth dropped to 5.4%. Sluggish urban consumption, weak corporate performance and a drop in manufacturing activity contributed to this slowdown.
GDP Of India 2024: Sectoral Performance in Q2 FY25
Manufacturing: Growth fell to 2.2%, a sharp decline from 14.3% in Q2 FY24, reflecting a slowdown in industrial production.
Mining: Reversed the rise from the previous quarter with a 0.1% decline.
Agriculture: With a growth rate of 3.5%, up from 1.7% in the same quarter last year, agriculture demonstrated resiliency.
Hospitality and Transportation: Registered a growth of 6%, indicating improvement in consumer-dependent sectors.
Construction: Growth slowed to 7.7%, a significant decline from 13.6% in Q2 FY24, although the sector remains an important driver of the economy.
Mixed performance across sectors underscores the uneven recovery in India’s economic outlook.
GDP Of India 2024: Factors boosting optimism for H2FY25
Despite a slow start, the second half of FY25 is likely to see a recovery. Economists expect key growth factors such as rural demand, festive spending and increased public investment to play a decisive role.
1. Improved rural consumption
Rural consumption has shown signs of improvement, supported by the following:
Higher rural wages: Better wages have boosted purchasing power in rural areas.
Two-wheeler sales growth: The increase in sales reflects strong demand for mobility in rural areas.
FMCG growth: Companies in the fast-moving consumer goods sector have reported a continued recovery in rural demand.
2. Seasonal boost from festivals and weddings
India’s festive and wedding seasons often lead to a significant increase in consumption. From higher sales of consumer goods to increased activity in transport and hospitality, these events are expected to contribute meaningfully to economic growth in the coming quarters.
3. Increased government spending
Government spending on infrastructure and welfare schemes is projected to accelerate in the second half of FY25. Public investment has historically acted as a catalyst for economic activity, creating jobs and boosting demand in related sectors.
4. Stable housing and private sector investments
Housing market growth: Continued strong performance in housing sales reflects stable domestic investment.
Improving private capital expenditure: Although modest, private investments are beginning to show positive signs, complementing public spending.
Challenges facing the Indian economy in 2024
Despite these encouraging trends, GDP Of India 2024 faces notable hurdles in 2024:
1. Persistent inflation
High inflation, especially in food prices, continues to constrain consumer spending and reduce disposable income. The Reserve Bank of India (RBI) has maintained the repo rate at 6.5% since February 2023, leaving little room for rate cuts to stimulate growth.
2. Sluggish urban consumption
Urban consumption remains under pressure, with limited income growth and high costs impacting discretionary spending. This pattern hinders the recovery of the economy as a whole.
3. Declining export growth
Services exports grew 13.6% in Q2 FY25, while merchandise exports fell 2.6%, the first decline in four quarters. Global uncertainties and low demand have significantly impacted export growth.
4. Weak manufacturing performance
The manufacturing sector, a significant contributor to India’s GDP Of India 2024, has struggled due to weak demand and rising input costs. Its growth has moderated significantly, posing challenges for industrial recovery.
India’s Economic Outlook for FY25
GDP of India 2024 is expected to rise by 6.2% in FY25, which is less than the RBI’s original prediction of 7.2%. India’s big economy continues to develop at one of the fastest growth rates in the world.
Sectors driving growth
Agriculture: Consistent performance in this sector is expected to provide stability.
Infrastructure development: Higher government investment in infrastructure will support related industries such as construction and transportation.
Services Sector: Improvement in hospitality, communication and transport services will play a key role in boosting growth of GDP Of India 2024.
Indicators to watch in H2 FY25
Private consumption trends: Sustained improvement in rural and urban demand is crucial for macroeconomic revival.
Government capital expenditure: Rapid implementation of public investment projects can significantly boost economic momentum.
Inflation levels: Easing inflationary pressures can improve consumer confidence and spending.
Conclusion
India’s GDP in 2024 is a tale of resilience in the face of difficulties. While the first half of FY25 faced setbacks due to weak manufacturing, subdued urban demand and external uncertainties, the second half offers significant growth opportunities.
India’s economy is set for a recovery driven by rural demand, festival-related consumption and increased public investment. Although growth rates may be lower than initial estimates, India continues to maintain its position as a global growth leader.
With a strategic focus on investment, consumption and inflation management, India’s economy is expected to regain momentum in the coming quarters, setting the stage for long-term growth.
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