India’s Q2 GDP growth slows more than expected to 5.4%

India Q2 GDP Growth 2024: India's economic growth decelerated significantly in July-September, reaching 5.4% year-on-year, considerably below the analysts of 6.5% and the central bank's 7% estimate. Urban consumption weakened due to increased food prices. The figure showed a decline from the previous quarter's 6.7%. Despite this slowdown, India remains one of the fastest-growing major economies.

Government officials and economists anticipate renewed momentum in the latter half of the fiscal year, supported by improved rural demand following favourable monsoon conditions, better harvests and increased government expenditure.

Economic activity measured by gross value added (GVA) showed 5.6% growth, down from 6.8% in the preceding quarter. The Reserve Bank of India (RBI) projects 7.2% GDP growth for the fiscal year ending March 2025, though several private economists have reduced their forecasts.


The agricultural sector showed improvement with 3.5% year-on-year growth in July-September, up from 2% previously. However, manufacturing growth declined to 2.2% from 7% in the previous quarter.

Analysts note that private consumption, which comprises 60% of GDP, has suffered from reduced urban spending, attributed to elevated food inflation, high borrowing costs and weak real wage growth, despite rural demand showing signs of recovery.

While finance and trade ministers advocate for interest rate reductions, the central bank is likely to maintain current policy rates in the upcoming week, according to a Reuters poll of economists, given ongoing inflation concerns.