New Delhi : India's economy witnessed a contraction in the quarter from July to September 2024, and its growth rate slowed to 5.4 percent. This is the lowest level in almost two years. In the previous quarter (April to June 2024), GDP growth was 6.7 percent. The performance of manufacturing and mining sectors remained weak in this quarter, which is the main reason for this decline.
India's gross domestic product (GDP) had increased by 8.1 percent compared to the same quarter last year, whereas this time it fell to 5.4 percent. Despite this, India still remains the world's fastest growing major economy. China's economy grew only 4.6 percent this quarter.
What do NSO figures say?
According to the data released by the National Statistical Office (NSO), the growth rate of the agriculture sector this time was 3.5 percent, which was 1.7 percent in the same quarter last year. However, the growth rate of the manufacturing sector was only 2.2 percent, compared to 14.3 percent last year. The mining sector also suffered a major decline, and its GVA (gross value added) grew by just 0.01 per cent in the quarter, compared to 11.1 per cent last year.
At the same time, better performance was also seen in some areas. Financial, real estate and professional services recorded a growth of 6.7 per cent, up from 6.2 per cent last year. Additionally, utility services such as electricity, gas and water supply grew by 3.3 percent, which is lower than last year.
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The construction sector grew by 7.7 percent, but this is less than last year's 13.6 percent. According to government data, GDP growth in the first half of the current financial year was 6 percent, which was 8.2 percent in the first half of the last financial year.
Moreover, the size of GDP at constant prices in the second quarter of the financial year 2024-25 is estimated to be Rs 44.10 lakh crore as against Rs 41.86 lakh crore in the previous year, showing a growth of 5.4 per cent. The size of GDP at market prices is estimated at Rs 76.60 lakh crore, which is 8 percent more than last year's Rs 70.90 lakh crore. The Centre's fiscal deficit in the first seven months of the current financial year has reached Rs 7,50,824 crore, which is 46.5 percent of the target for the entire financial year.
Main causes of recession: Food inflation, high cost of borrowing and stagnant wage growth.
According to economists, there are many reasons behind the recession in India. Prominent among these are rising food inflation, high borrowing costs and stagnation in real wage growth. These factors together affected urban private consumption, which accounts for about 60% of India's GDP. For example, retail food inflation soared to 10.87% in October, causing a major decline in people's purchasing power.
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