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Published 15:10 IST, November 29th 2024

India Q2 GDP Data Today: Growth To Slowdown? What To Expect - Check Date, Time

The likely drag on growth in the second quarter is because of a combination of challenges, including uneven performance across sectors

Reported by: Business Desk
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GDP data
GDP data | Image: GDP data

India’s growth is likely to slowed in the second quarter of FY25, which is likely to be at 6.5 per cent, lower than 6.7 per cent registered in the first quarter of FY25.  The likely drag on growth in the second quarter is because of a combination of challenges, including uneven performance across sectors, weak corporate margins, and subdued private consumption, especially in urban areas, contributed to this moderation. Heavy rainfall, high food inflation, and sluggish export growth further dampened the overall GDP. The government is set to release official GDP data for Q2 on November 29, 2024.

Industrial Activity Slows Down, Manufacturing and Mining Hit Hard

India’s industrial activity also showed signs of slowing down in Q2. The Index of Industrial Production (IIP) grew by just 2.6 per cent YoY, a sharp decline from 5.5 per cent YoY in Q1. Manufacturing activity saw a significant slowdown, with growth dipping to 3.1 per cent, compared to 6.8 per cent in the previous quarter. The mining sector also contracted, reversing the double-digit growth observed in the same period last year.

Manufacturing sub-sectors like pharmaceuticals, metals, food products, and motor vehicles struggled, while cement output was impacted by lower government spending in Q1. However, the cement sector slightly recovered in Q2, with 3 per cent YoY growth. In contrast, steel consumption showed strong performance in Q2, though steel production remained relatively flat.
Private Consumption Slows Amid Rising Food Inflation

Private consumption, a key driver of India’s growth, showed signs of deceleration in Q2 FY25 after a rebound in Q1. Rural consumption, however, displayed resilience, with fast-moving consumer goods (FMCG) sales growing by 6 per cent year-on-year (YoY) in Q2, compared to just 2 per cent in urban markets. Tractor and two-wheeler sales saw growths of 3.2 per cent and 13.2 per cent YoY, respectively, reflecting stronger rural demand.

Services Sector Maintains Positive Momentum

While industrial activity faltered, the services sector continued to show robust performance. India’s Services PMI averaged 59.6 in Q2, slightly down from 60.5 in Q1 but still reflecting healthy expansion. For October, the PMI stood at 58.5, with a preliminary November figure of 59.2, signaling continued growth in the services sector.

Disappointing Corporate Earnings

The performance of Indian companies in Q2 FY25 has raised concerns, with many posting weaker-than-expected results. According to JM Financial, 45 per cent of the companies in its coverage missed earnings estimates. This underperformance triggered a sharp selloff in the equity markets, causing investors to worry about the potential for a broader economic slowdown.

Government Capex Picks Up, But Still Below Target
On the government side, capital expenditure (capex) showed signs of improvement in Q2 after a slow start in the first quarter. The central government’s capex grew by 10 per cent YoY in Q2, though state government spending remains sluggish, contracting by 5.6 per cent. With the Centre's capex down 15.4 per cent YoY in the first half of FY25, economists predict that government spending must rise significantly in the second half to meet its budget target. While a rebound in government capex is expected in the second half of FY25, the overall capex may still fall short of the budgetary target.

Updated 15:10 IST, November 29th 2024