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India's Gross Domestic Product (GDP) is expected to fall below 6.5 per cent for the current financial year 2025, as GDP growth in the second quarter (Q2 FY25) slowed to 5.4 per cent, according to a report by the State Bank of India (SBI).
The report highlighted that the real GDP growth in the first half (H1 FY25) stood at 6.0 per cent, with a projected growth of 6.5-6.8 per cent in the second half (H2). As per report the manufacturing-led slowdown significantly impacted the overall economic performance. The industry sector's growth declined to a six-quarter low of 3.6 per cent in Q2, contributing to the subdued GDP numbers. It said, "With 6.0 per cent real GDP growth in H1 FY25, the overall growth for full fiscal would be less than 6.5% (assuming 6.5-6.8% growth in H2). This manufacturing led slowdown gives a sketchy reading when juxtaposed against non-impulsive credit growth". The report stated that the incremental growth in the industry sector was just Rs 42,515 crore in Q2 FY25 compared to Rs 1.4 lakh crore in the corresponding period of the previous year, marking a decline of nearly Rs 1 lakh crore in incremental terms. It added, "After 7-quarters, GDP growth plunged below 6.0 per cent mark in Q2 FY25 primarily owing to 3.6 per cent growth in industry sector". Despite some resilience in other sectors, the sluggish industrial performance weighed heavily on the economy. The services sector grew by 7.1 per cent in Q2 FY25, slightly higher than 6.0 per cent in Q2 FY24 but almost flat compared to the 7.2 per cent growth in Q1 FY25. The agriculture sector, which has been consistently performing well since the pandemic, grew by 3.5 per cent in Q2 (compared to 1.7 per cent in Q2 FY24). However, its contribution to overall growth remained modest, with a weighted contribution of just 40 basis points. The Gross Value Added (GVA) growth for Q2 stood at 5.6 per cent, while nominal GDP grew by 8 per cent. Notably, this is the first time in seven quarters that GDP growth has fallen below the 6.0 per cent mark, highlighting the challenges faced by the economy. The report suggested that year-on-year comparisons may provide a skewed narrative and emphasizes focusing on incremental growth. While the Indian economy has shown resilience in the past, the current slowdown signals a temporary pause in the growth story, driven by broad-based sluggishness in the industrial sector. (ANI)
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