Modi Government 3.0 Faces Tough Times: GDP Drops to 6.7%, a 15-Month Low

According to the data released by the government, the GDP growth rate has decreased to 6.7% during the first quarter of the fiscal year 2024-25, from April to June, due to weak performance in the agriculture and services sectors. This marks the lowest level in the past 15 months.

It is noteworthy that India’s GDP was 8.2% in the first quarter of the fiscal year 2023-24, from April to June. Despite this slowdown, India’s GDP growth of 6.7% during the same period in FY 2024-25 is still higher compared to China’s 4.7%, making India the fastest-growing major economy in the world.

Lower GDP Growth Compared to Previous Quarters

The GDP growth rate recorded at 6.7% in the first quarter of FY 2024-25 is lower than the 6.2% noted in the fourth quarter of FY 2022-23, from January to March.

According to the GDP figures released today by the National Statistical Office (NSO), the agriculture sector experienced only a 2% growth during the first quarter of FY 2024-25, from April to June. This is a decrease from the 3.7% growth recorded in the same quarter of the previous fiscal year, 2023-24.

Manufacturing Sector Shows Improvement Amidst Overall Slower Growth

On the other hand, the manufacturing sector’s growth rate increased to 7% during the first quarter of the current fiscal year, from April to June, compared to 5% during the same period last year.

Additionally, statistics for the growth rate of eight core sectors were released. Due to a decrease in the production of crude oil and natural gas in July, the growth rate of the eight key infrastructure sectors fell to 6.1%.

Decline in Core Sectors’ Growth Rate in July

In June, the growth rate of the eight core sectors was 5.1%. In contrast, the growth rate for these sectors was 8.5% in July 2023. The eight core sectors include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity.

It is notable that the Index of Industrial Production (IIP) assigns a weight of 40.27% to these eight core sectors. In July, there was a 2.9% decrease in crude oil production and a 1.3% decrease in natural gas production.