Delving deeper into emerging economic slowdown

The interim and fullyear Budget speeches of the Union Finance Minister for the current financial year, 2024-25, anticipated a robust GDP growth of 8% plus.

- AJAY DUA

Fairly soon thereafter, it was pared down to 7.2% by the RBI, the country's central bank.

In this context, the secondquarter growth of 5.4%-the lowest rate in two yearscame as a disappointment and pushed down the first half-year's increase to 6.6%.

The Finance Minister and others in the government have termed it a temporary blip, assuring that growth in the second half would compensate for the earlier decline, keeping the Indian economy on track to achieve the projected expansion.

The hands-on Nirmala Sitharaman, who has weathered several economic storms since taking charge of the Finance Ministry over four years ago, has perhaps drawn inspiration for the sharp decline in growth in familiar factors: a slower pace of manufacturing, sluggish exports, inadequate private sector capital formation, geopolitical uncertainties, and a global trade slowdown. True as these might be, additional forces have also contributed to the significant drop in gross value-added growth-which reflects the actual production base from a robust 14.3% to a mere 2.15%. Core industries such as mining and manufacturing struggled, and labour-intensive sectors like construction, electricity, gas, water, and other utilities also experienced notable setbacks. Recognizing these challenges, the Reserve Bank of India promptly revised its growth projection for the entire year further downward to 6.6%.