A REALITY CHECK FOR GDP

REAL GDP GROWTH FELL BELOW 7 PER CENT, COMPARED TO 8 PER CENT IN THE YEAR-AGO PERIOD, THE LOWEST IT HAS BEEN IN THE PAST FIVE QUARTERS

- M.G. Arun

Fears that India may be unable to sustain a growth rate of more than 7 per cent came true on August 30, when the first quarter growth numbers for FY25 were announced. Real GDP grew only 6.7 per cent in Q1FY25, compared to 8.2 per cent in the same quarter a year ago. The growth was the slowest in five quarters (the economy grew over 7 per cent in the preceding four quarters), and was below the expectations of several agencies, including the Reserve Bank of India, which had earlier pegged its estimations of Q1 GDP growth at 7.1 per cent.

Agriculture was the biggest dampener, growing only 2 per cent in the quarter under review compared to 3.7 per cent in the previous quarter. Experts attribute it to the vagaries of the weather, especially the impact of a heat wave in several parts of the country. But even the services segment, including travel and hospitality, which had grown 10.7 per cent a year ago, slowed down to 7.2 per cent this time. This could simply be in comparison to the high numbers posted during the post-Covid recovery of the economy.