Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the first quarter growth figures for the current financial year, noting that while the RBI had projected a growth rate of 7.1 percent, the actual figure reported by the National Statistical Office (NSO) stood at 6.7 percent.
Governor Das pointed out that despite the 6.7 percent figure appearing lower than the projected 7.1 percent, growth in most sectors remained robust, surpassing 7 percent. "For the first quarter this year, the Reserve Bank's projection was 7.1 percent. But the actual number which has been given by the National Statistical Office is 6.7 percent. Now, 6.7 percent would give an impression that it is lower than 7.1 percent. I think in all the sectors, the growth is 7 percent plus in the first quarter," said Das.
The components and main drivers responsible for the GDP growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7 percent, he said.
He attributed the slight dip to two key factors: government expenditure and agriculture. "Two aspects have slightly pulled it down, one is government expenditure, which is both central government and state government expenditure. The other thing which was slightly lower was agriculture, which grew at about 2 percent or so," said Das.
He said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission.
"We would expect the government expenditure to pick up in coming quarters and provide the required support to growth," Das said.
"Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 percent projected by the RBI will be materialized in coming quarters," the governor asserted.
The latest estimates put out by the national statistical office (NSO) showed that India’s real or inflation-adjusted gross domestic product (GDP) grew 6.7 per cent in the April-June quarter, slower than the previous quarter's 7.8 per cent and 8.2 per cent growth in the same quarter of the previous year.
The slowdown in India's gross domestic product in the first quarter of the current fiscal year has been owing to the general elections and a fall in the government capital expenditure during the period, Chief Economic Advisor (CEA) V Anantha Nageswaran said.
Nageswaran said that India can easily look at achieving 6.5-7 percent of GDP growth in FY25 as estimated in the Economic Survey. In fact, he said that over 7 percent growth can also be achieved as the Budget provides further boost for employment generation.
The growth was subdued compared with the 8.2 percent jump witnessed in Q1FY24, but in line with the consensus estimate of Moneycontrol survey of 13 economists conducted last week, which had predicted 6.8 percent growth, which had predicted 6.8 percent growth with forecasts ranging from 6 percent to 7.5 percent. It was lower than RBI's forecast of 7.2 percent for the first quarter.
On August 29, credit ratings agency Moody's revised India's economic growth forecast upwards to 7.2 per cent for 2024 and to 6.6 per cent for 2025 from its earlier estimates of 6.8 per cent and 6.4 percent respectively, citing strong broad-based growth.
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(With PTI inputs)
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