NEW DELHI: In the July-September quarter of 2024, India's GDP growth rate decelerated to 5.4%, the lowest in almost two years, according to data released by the National Statistics Office (NSO) on Friday. This decline was primarily due to sluggish growth in manufacturing and a slowdown in mining and quarrying. Despite this, India maintains its status as the fastest-growing large economy, surpassing China's GDP growth of 4.6% during the same period.

Manufacturing, which constitutes over 17% of the total Gross Value Added (GVA) output, expanded by a mere 2.2% in July-September, compared to a 7% growth in April-June and 14.3% growth in the same period last year. Mining and quarrying were significantly impacted by prolonged rainfall, resulting in a contraction of 0.1% in July-September, down from 7.2% growth in the previous quarter and 11.1% in the year-ago period.

Although the GDP slowdown is concerning, there are positive indicators such as increased agricultural growth and encouraging trends in high-frequency indicators like automobile sales and export growth, suggesting potential for revival in the coming quarters. The construction sector also showed promise, continuing its high single-digit growth from the previous year into the first half of the current financial year.

The Reserve Bank of India (RBI) has projected a much higher GDP growth rate of 7.2% for 2024-25 and 7.1% for FY26. Economic Affairs Secretary Ajay Seth recently stated there is “no significant downside risk” to the 6.5-7% growth projection for this year.

In the primary sectors, agriculture grew by 3.5% in July-September, up from 2% in the previous quarter and 1.7% in the same period last year. The construction sector recorded a "high single-digit" growth of 7.7% in Q2, following a 10.5% growth in Q1 and 13.6% in the year-ago period. The services sector grew at 7.1% in Q2, slightly slower than the 7.2% in Q1 and 6% growth in the corresponding period last year.