Gross Value Added (GVA) grew at 5.6%, also below the poll estimate of 6.5%. GVA growth was significantly lower than the 7.7% recorded year-on-year and 6.8% in the previous quarter.
Private final consumption grew at 6% in Q2FY25, improving from 2.6% year-on-year but lower than the 7.4% sequential growth. Government final consumption, however, slowed to 4.4%, significantly below the 14% growth seen in the previous year, though rebounding from a contraction of -0.2% quarter-on-quarter.
Gross fixed capital formation, a proxy for investment activity, grew at 5.4%, sharply down from 11.6% year-on-year and 7.5% in the prior quarter.
External trade contributed modestly, with exports growing at 2.8%, a deceleration from 5% year-on-year and 8.7% sequentially.
Sectoral performance revealed mixed trends, with agriculture growth improving to 3.5% compared to 1.7% year-on-year and 2% in the previous quarter. However, mining contracted by -0.1% compared to robust growth of 11.1% year-on-year and 7.2% sequentially. Manufacturing growth slowed significantly to 2.2% from a stellar 14.3% year-on-year and 7% quarter-on-quarter.
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Electricity growth slowed to 3.3% compared to 10.5% year-on-year and 10.4% in the previous quarter. Construction grew by 7.7%, a decline from 13.6% year-on-year and 10.5% sequentially.
Trade, hotels, and transport saw an uptick, growing at 6% versus 4.5% year-on-year and 5.7% quarter-on-quarter. Financial and real estate services posted a modest growth of 6.7%, slightly above the 6.2% year-on-year but below the 7.1% sequentially.
Public administration and other services grew by 9.2%, improving from 7.7% year-on-year, though marginally lower than the 9.5% in the prior quarter.
Economists, however, remain optimistic about a recovery in the second half of FY25. Post-election state spending and a strong harvest are expected to drive rural demand. “We foresee a recovery in growth during the second half,” noted Axis Capital Economic Research.
DK Srivastava, EY India’s Chief Policy Advisor, cited a 15.4% contraction in government capital expenditure during April-September as a key factor behind the slowdown. He urged the government to prioritise accelerated investments to spur growth.
Meanwhile, Saurabh Garg, Secretary of the Ministry of Statistics and Programme Implementation (MoSPI), announced that the next economic census would begin in April 2025. Plans are underway to incorporate alternative data sources, such as night light data, and include district-level estimates starting in January 2025.
A new GDP series with 2022-23 as the base year, along with a revised CPI series, is expected by February 2026, aiming to improve the accuracy and comparability of economic data
