Industry downturn leads India's Q1 FY25 GDP growth to 6.7%: Union Bank

30 Aug '24

2 min read

Industry downturn leads India's Q1 FY25 GDP growth to 6.7%: Union Bank

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India's GDP growth rate would have moderated to around 6.7 per cent in Q1 FY25 and the gross value added (GVA) growth is likely to have settled at around 5.8 per cent compared to Q4 FY24's 6.3 per cent, the Union Bank said.
The industrial sector was the key driver of this slowdown, led by manufacturing, whose GVA growth fell from 8.9 per cent to 4.5 per cent.

India’s gross domestic product (GDP) growth rate would have moderated to around 6.7 per cent in the first quarter (Q1) this fiscal and the gross value added (GVA) growth during the same period is likely to have settled at around 5.8 per cent compared to 6.3 per cent in the preceding quarter, according to a Union Bank report.

This figure falls slightly below the Reserve Bank of India's (RBI) projection of 7.1 per cent for the quarter. The government will release the Q1 FY25 GDP growth statistics on August 30.

The industrial sector was the primary driver of this slowdown, led by the manufacturing segment, exacerbated by election-related uncertainties, code of conduct impositions leading to lagged government spending, the report noted, adding that June traditionally has been a weak quarter.

The downturn marks the third consecutive quarter of declining industrial growth, with the sector's GVA growth dropping from 8.4 per cent in Q4 FY24 to 5.8 per cent in Q1 FY25.

The manufacturing segment has been notably affected, with GVA growth plummeting from 8.9 per cent in Q4 FY24 to 4.5 per cent year on year (YoY) in Q1 FY25.

The agriculture sector likely gave a surprise on the upside, with its growth spiking sequentially to 2.2 per cent in Q1 FY25 from 0.6 per cent in Q4 FY24. This is likely the highest number in the last four quarters, though still lagging behind the growth rate of 3.7 per cent seen in Q1 FY24.

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