CEA Anantha Nageswaran on India’s GDP growth: Numbers are disappointing, but not alarming

India’s Chief Economic Advisor (CEA) Dr V Anantha Nageswaran, has described the country’s second-quarter gross domestic product (GDP) growth of 5.4% as “disappointing” but reassured that the situation is “not alarming.” Speaking at a media briefing in the national capital on Friday, November 29, Nageswaran listed key factors contributing to the slowdown while pointing to sectors showing resilience.

“The GDP growth print of 5.4% is on the lower side. It’s disappointing, but it’s not an alarming situation,” he stated.

The GDP growth in the world’s fastest-growing large economy slowed to a near two-year low of 5.4% in the July-September quarter of the current fiscal owing to poor performance of the manufacturing and mining sectors as well as weak consumption.

The GDP had expanded by 8.1% in the July-September quarter of the 2023-24 fiscal and 6.7% in the first quarter of the current fiscal (April-June 2024).

The previous low level of GDP growth at 4.3% was recorded in the third quarter (October-December 2022) of the financial year 2022-23.

The CEA highlighted that the global economic environment remains challenging, impacting India’s domestic manufacturing sector. Among key concerns include a slowdown in production and the adverse effects of dumping in specific industries, notably steel. While steel consumption in the country has risen, production levels have not kept pace, Nageswaran added.

Quarrying and manufacturing emerged as the primary contributors to the supply-side slowdown. Gross fixed capital formation (GFCF), a measure of investment activity, has also underperformed due to reduced capital expenditure by the public sector, the CEA said.

Among bright spots in the economy, Nageswaran pointed out that agriculture continued to shine, delivering robust growth amid the economic challenges. The construction sector also stood out, registering high single-digit growth over the full year, reflecting resilience in infrastructure activity.

The CEA suggested that some of the factors driving the slowdown might lose momentum in the coming quarters, offering hope for a rebound.

“Some of the slowdown factors may not continue at the same pace in the coming quarters,” he said, signaling a cautiously optimistic outlook.

#NewsFlash | #GDP growth print of 5.4% is on the lower side; it’s disappointing but not an alarming situation. Global environment has been challenging which has impacted domestic manufacturing, says V Anantha Nageswaran, Chief Executive Adivisor#Q2FY25GDP pic.twitter.com/vFnRKzhB5v

— CNBC-TV18 (@CNBCTV18Live) November 29, 2024

The article will be updated with more details