The Indian economy expanded by 6.7% from the previous year in the June quarter of 2024, slowing from the 7.8% increase in the earlier period, preliminary figures from the country’s statistical office showed Friday.
The Reserve Bank of India (RBI) had forecast 7.1% growth for the quarter while economists had forecast 6.9% expansion. It was the slowest expansion in five quarters, as a slowdown in farm output, and a slump in government spending offset the gains in manufacturing and private consumption.
Farm sector growth slowed to 2.7% affected by last year’s poor monsoon and heatwaves, which caused reservoirs in many states to dry up. Government spending shrank 0.2%, mainly due to curbs ahead of the parliamentary election.
Manufacturing, which makes up about 17% of India’s GDP, improved to 7% and private consumption, which constitutes about 60% of GDP, hit a six-quarter high of 7.4%.
Gross fixed capital formation was 7.5% higher, recovering from a four-quarter low of 6.5% in the previous quarter.
Reserve Bank of India governor Shaktikanta Das told the national CA conference in Bhubaneswar on Saturday (Aug. 31) that the country’s “growth story is intact.”
The Gross Value Added (GVA), seen by economists as a more stable measure of growth, grew by 6.8% in April-June 2024 on an annual basis, compared to 6.3% in the previous quarter.
India’s growth rate was the strongest among the fast-growing main economies, surpassing China’s 4.7 percent for the June quarter. Economists anticipate that easing inflation and a pickup in government spending will shore up Indian growth in the coming months.
Furthermore, if the RBI cuts its policy rate later this year, it could boost household consumption and support private investments.
