Q1 growth seen in slow motion on manufacturing slump, lower government spending amid polls
urban consumption, softer manufacturing sector growth and moderate government expenditure amid elections may have dragged down growth in the first quarter of FY25. India's economy likely grew by a median 6.85% in the April-June period from a year earlier, according to an ET poll of 14 economists, slipping from 7.8% in the last quarter of FY24 and 8.2% in the year before.
The growth estimates ranged from 6% to 7.5%. The median figure is lower than the RBI forecast of 7.1% for the quarter. «Slowing of manufacturing activity and lower government expenditure during the election period likely contributed to the slowdown in output growth in the quarter,» said Shreya Sodhani, regional economist, Barclays, pencilling in 7.1% gross domestic product (GDP) growth in the June quarter. The government will release June quarter growth data on August 30.
The general elections held in the April-June period impacted government spending.
Rural demand improving
Rating agency ICRA expects GDP growth to moderate to a six-quarter low of 6% with agriculture, forestry and fishing recording a tepid 1% rise.
The high base effect of last year will have an impact on the figure, said Bank of Baroda chief economist Madan Sabnavis.
“We have seen that the government expenditure during the first quarter has been modest, probably on account of the elections,” he said. “The other factor is that manufacturing has not shown the kind of take-off which we had expected earlier.”
Total government expenditure in the first quarter was Rs 9.69 lakh crore,
