One of the most reassuring aspects of the Q2 FY25 data is the strong performance in private consumption, which grew by an impressive 6%. This figure not only outpaces the overall GDP growth rate but also marks a significant improvement over the 2.6% growth recorded in Q2 FY24. The resilience in private consumption effectively dispels recent speculation about potential weakness in consumer spending. It underscores robust demand from households, a critical driver for the Indian economy, particularly during periods of macroeconomic uncertainty.
Government consumption also showed signs of recovery, improving from the previous quarter. However, it was slightly lower than the corresponding quarter of the previous year, likely reflecting cautious fiscal spending in the lead-up to elections. As election-related uncertainties subside, government expenditure could regain momentum, adding another layer of support to economic activity.
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