The RBI Governor Shaktikanta Das stated that GDP number for Q1FY25 fell due to lower government spending because of Lok Sabha elections and low growth in the farm sector.
He, however, maintained that India's growth story is intact and mentioned that all the other major sectors reported growth above 7 per cent, ANI quoted him while he was speaking at National CA Conference in Bhubaneswar, Odisha.
“I would like to say with all humility and sincerity and with all confidence that the Indian growth story is intact," the RBI Governor said.
On the reason for moderation of growth he said, “It's one component which has pulled down the growth, its government expenditure, both central and state government expenditure, perhaps due to the election season.”
India's gross domestic product (GDP) grew at 6.7% in the April-June quarter, which is the lowest in five quarters, according to data released by the statistics ministry on August 30. The Indian economy grew by 7.8% in the previous quarter.
The RBI Governor hoped that the government will increase spending in the upcoming quarters and the central bank will be able achieve 7.2 percent growth in this fiscal year.
"I think going ahead I would like to believe that whatever growth projection we have given for the current year of 7.2 per cent should happen should materialize,” RBI Governor said.
Governor Das also said that in the first quarter, investments reported 7.5 per cent growth, industries marked 7.4 per cent growth, manufacturing grew by 7 per cent, services sector grew by 7.7 per cent, and the construction sector grew by 10.5 per cent.
The farm sector grew by 2 per cent in April-June quarter but after a good monsoon the sector is expected to report good numbers as the country has received good rainfall which will aid in agricultural growth, according to the RBI Governor.
“The agriculture sector in the first quarter has grown by 2 per cent but thanks to the monsoon being very good this year and monsoon initially made a slightly late start. But it has really now covered large parts of the country excepting few parts in eastern India,” he said.
Previously, Chief Economic Advisor (CEA) V Anantha Nageswaran attributed GDP numbers to Lok Sabha elections and lower capital expenditure by the government. He, however, has maintained that the growth momentum is strong in Q1FY25.
