Finance Minister Nirmala Sitharaman told Lok Sabha on December 17 that the government believes the GDP growth slowdown in Q2FY25 "is a temporary blip" and that an improvement will be seen in coming quarters.
"Government believes that the Q2 GDP growth slowdown is a temporary blip, and we will see an improvement in the coming quarters," said Sitharaman while replying to the discussion on Supplementary Demands for Grants - First Batch 2024-25 in Lok Sabha.
Sitharaman acknowledged that the second quarter of the current fiscal has been challenging for India as well as most of the economies of the world
However, India's GDP growth rate averaged 8.3 percent in last three years, there has been a steady, sustained growth, an exceptional achievement by global standards. This reinforces India’s position as the fastest-growing major economy in the world, she said.
"I am optimistic about an improvement in economic performance going ahead," she added.
The finance minister's comments come at a time when India’s GDP growth slumped more than expected to a seven-quarter low of 5.4 percent for the second quarter of FY25 compared with 6.7 percent in the first quarter.
While, mining contracted by 0.1 percent in the second quarter, marking the first deceleration in two years, manufacturing slowed down drastically to 2.2 percent from 7 percent earlier.
Sitharaman said that the slowdown in the manufacturing sector is not generalised and has been restricted to a few sectors.
On inflation, Sitharaman said that the headline retail rate was brought back to 5.1 percent during 2014-2024, after it had touched double digit figures during the previous Congress-led regime.
"The Centre is committed to better managing food inflation where volatility in certain food items is weather driven," she said.
India’s retail inflation eased to 5.5 percent in November, easing from a 14-month high of 6.2 percent in the previous month, as food prices cooled off.
Food inflation had eased to 9 percent for the month compared with 10.9 percent in October.
Consumer prices remained above 5 percent for a third consecutive month.
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