Finance Minister of India Nirmala Sitharaman said on Tuesday that the second quarter’s lower-than-expected GDP growth of 5.4% was a “temporary blip” and expressed optimism that the economy will develop well in the future quarters.
Responding to a discussion in the Lok Sabha on the first batch of Supplementary Demands for Grants, she stated that India has had “steady and sustained” growth, with an average GDP growth rate of 8.3 percent over the previous three years.
The actual growth rate for the first and second quarters of the current fiscal year (FY25) was 6.7% and 5.4%, respectively. The second-quarter rate of 5.4% is lower than predicted.Q2 of the current fiscal year has been a difficult quarter for India and most other countries across the world,” she stated.
The government feels that the Q2 GDP growth slowdown is a transient blip and that we will see a recovery in the future quarters,” Sitharaman stated in response to the Lok Sabha’s discussion on Supplementary Demands for Grants – First Batch 2024-25.
Sitharaman recognized that the second quarter of the current fiscal year has been hard for India and the majority of the world’s economies.
However, India’s GDP growth rate has averaged 8.3 percent over the previous three years, indicating stable and sustained development, which is an excellent performance by global standards. This supports India’s status as the world’s fastest-growing major economy, she added.
“I am optimistic about an improvement in economic performance going ahead,” she said. The finance minister’s comments came as India’s GDP growth fell more than predicted to a seven-quarter low of 5.4 percent in the second quarter of FY25, compared to 6.7 percent in the first quarter.
While mining contracted by 0.1 percent in the second quarter, marking the first slowdown in two years, manufacturing fell dramatically to 2.2 percent from 7 percent previously.
According to Sitharaman, the manufacturing industry is experiencing a slowdown that is limited to a few sectors. On inflation, Sitharaman stated that the headline retail rate was reduced back to 5.1 percent between 2014 and 2024, after reaching double digits during the previous Congress-led rule.
