India’s GDP growth likely slowed to a six-quarter low in Q2: Mint poll

India's economic growth likely slowed to 6.5% in the September quarter, which would be its slowest pace in six quarters, according to the median estimate of 26 economists in a Mint poll. This marks a decline from 6.7% in the preceding quarter. The expectations of a slowdown are due to uneven performance across sectors, with a decline in private consumption growth offsetting the positive effects of government spending and a rural recovery.

Gross domestic product (GDP) data for the second quarter of FY25 is scheduled to be released on 29 November. 

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Economists in the poll forecast India's GDP growth would range between 6.20% and 6.85%, with only two of them expecting growth in the September quarter to outpace that of the June quarter. If the estimates prove correct, GDP growth will fall short of the Reserve Bank of India's (RBI) projection of 7% in Q2, which was revised down from 7.2% at the central bank’s October meeting.

Aditi Nayar, chief economist at ICRA Ltd, said in a report dated 20 November that growth faced multiple headwinds in Q2 as heavy rainfall disrupted mining activity, electricity demand and retail footfalls. Merchandise exports contracted and companies in several sectors saw their margins weaken. These challenges offset positives such as the pick-up in capex after the parliamentary elections and a healthy expansion in the sowing of major kharif crops.

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With 6.5% growth in Q2, the average GDP growth in the first half of the financial year would be 6.6%. However, a few economists expect the second half to be stronger than the first half. 

Sakshi Gupta, principal economist at HDFC Bank, said, “GDP growth is projected to come in closer to 6.8-7% for Q3 and Q4. A rise in rural demand and pick-up in government spending are likely to support growth. High-frequency indicators for October (GST collections, purchasing managers' indices, E-way bills) showed some improvement in activity,” she added. 

According to Mint's emerging markets tracker, the purchasing managers’ index (PMI) has been doing well consistently, but much of the boost came from exports growth in October. Exports rose 17% year-on-year that month, reversing the contraction or weak growth of the previous four months.

Despite an expected pick-up in the second half, economists predict that the GDP growth for FY25 will be below 7%. 

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