He expressed optimism that economic growth would accelerate significantly in the second half of FY25, driven by improving trends in high-frequency indicators during October and November.
“The growth rate is expected to be much higher in the second half of the financial year,” he said, adding that the government is actively working to achieve the GDP growth estimates outlined in the Economic Survey.
India’s GDP grew by 5.4% in the July-September period, marking its slowest expansion in two years. This was a sharp decline from the 8.1% growth recorded in the same quarter last year and fell short of the 6.5% projection for the period.
The subdued performance was largely attributed to challenges in manufacturing and mining, which have faced headwinds from global economic uncertainty and rising input costs.
Also read: India’s Q2 GDP growth slows to a shocking 5.4%, lowest since Q3 FY23
Despite the slowdown, Chief Economic Advisor V Anantha Nageswaran had earlier noted that the figures were “disappointing but not alarming.” He reaffirmed confidence in meeting the government’s target of 6.5–7% GDP growth for FY25 but acknowledged risks posed by global economic challenges, particularly in export-driven sectors.
The manufacturing sector showed signs of strain, with the Purchasing Managers’ Index (PMI) slipping to 56.5 in November, its lowest level in 11 months. Rising input costs and intense competition were cited as primary factors behind this decline, affecting industries like chemicals, cotton, and rubber.
While domestic steel consumption rose during the quarter, production struggled to match demand due to increased dumping from international players. Inflation in manufacturing, meanwhile, reached its highest point since July, adding to the sector’s challenges.
In response to the slowdown, the government has stepped up efforts to bolster growth. Prime Minister Narendra Modi’s administration is expected to enhance spending on infrastructure, as outlined in the ₹48 trillion budget announced earlier this year.
Also read: Q2 GDP growth shocker may trigger action from RBI; raise questions over India’s potential growth
Additional measures, including incentives for electric vehicle manufacturers and a proposed increase in the foreign direct investment limit in insurance to 100%, are aimed at boosting domestic manufacturing and economic activity.
Analysts remain optimistic about a stronger second half, with higher government expenditure expected to offset the challenges of the first half.
Despite the dip in Q2, India retains its position as the fastest-growing major economy.
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