Sluggish agri, services sectors slacken GDP growth to 15-month low of 6.7%

Tribune News Service

Chandigarh, August 30

The slow growth in the primary sector and tertiary sectors such as trade, hotels, transport, communication, finance, real estate and professional services in the first quarter of the current fiscal has cast a shadow over the GDP growth.

As a result, India’s economic growth slowed to a five-quarter low of 6.7 per cent in the first quarter of this fiscal from 7.8 per cent in the preceding March quarter, according to data released by the government today.

The previous GDP low was 6.2 per cent in January-March 2023. The growth was subdued compared to the 8.2 per cent jump witnessed in Q1FY24.

However, in comparison to China, India’s growth is better as China’s GDP growth in the April-June quarter was 4.7 per cent.

According to government data, real GDP or the GDP at constant prices in Q1 of 2024-25 is estimated at Rs 43.64 lakh crore, against Rs 40.91 lakh crore in Q1 of 2023-24, showing a growth rate of 6.7 per cent. Nominal GDP or the GDP at current prices in Q1 of 2024-25 is estimated at Rs 77.31 lakh crore, against Rs 70.50 lakh crore in Q1 of 2023-24, showing a growth rate of 9.7 per cent. The agriculture sector recorded a 2 per cent growth, down from 3.7 per cent in the April-June quarter of 2023-24, as per the National Statistical Office (NSO) data released on Friday.

Similarly, trade, hotels, transport, communication and services related to broadcasting recorded a 5.7 per cent growth in the April-June quarter of 2024-25, down from 9.7 per cent in the corresponding period of the previous year. As far as financial, real estate and professional services category is concerned, against the growth of 12.6 per cent in the April-June quarter of 2023-23, it registered a growth of 7.1 per cent only in the first quarter of the current fiscal year. However, the growth in the manufacturing sector accelerated to 7 per cent in the first quarter of the current fiscal compared to 5 per cent in the year-ago period. The growth in production in eight key infrastructure sectors slowed down to 6.1 per cent in July this year compared to 8.5 per cent in July 2023 due to a decline in the output of crude oil and natural gas.

Crude oil and natural gas output contracted by (-) 2.9 per cent and (-) 1.3 per cent, respectively, in July.

The growth rate, however, is up from 5.1 per cent in June. During April-July this fiscal, the output of core sectors rose by 6.1 per cent against 6.6 per cent in the same period last fiscal. The eight core sectors contribute 40.27 per cent to the Index of Industrial Production (IIP), which measures the overall industrial growth.

The Index of Eight Core Industries (ICI) measures the combined and individual performance of production in eight core industries — cement, coal, crude oil, electricity, fertilisers, natural gas, refinery products and steel. The eight core industries comprise 40.27 per cent of the weight of items included in the IIP.

Removed Angel Tax to boost fintech: PM

PM Narendra Modi on Friday said the government was making necessary policy changes, like removal of angel tax, to promote the fintech sector, even as he asked the regulators to take additional measures to check cyber frauds, which can have a crippling impact on startups.

Fiscal deficit hits 17.2% of FY25 target

The Centre’s fiscal deficit at the end of the first four months (April-July 2024) of the current financial year touched 17.2 per cent of the full-year target. In absolute terms, the fiscal deficit for the period touched ~2.77 lakh crore.