Finance Minister Nirmala Sitharaman today allayed fears that India’s GDP growth rate slowed down recently as being systematic. She said that as much as the economic activity in the second quarter may have softened, activity in the third quarter will provide compensation for it.
India’s economic expansion decelerated to 5.4% during the July-September quarter of FY25, lower than expected and the weakest pace in seven quarters. This was a deterioration from the 6.7% in the first quarter of the fiscal year. At a function held in Delhi, she blamed it on factors such as lower levels of public spending and capital spending. “It is not a general rate cut; in their case, it is even more of inactivity on the public as well as capital expenditures. I believe that Q3 alone will be able to compensate for all these,” she said.
The minister also emphasized external and domestic conditions restraining the GDP. “Global demand has plateaued to put pressure on export growth, though the purchasing power in India has been arriving, the issue of wage fixation has also raised its concern. These have arisen, and we are closely monitoring these factors, as they might affect domestic consumption patterns,” she said.
However, Sitharaman remained optimistic, saying that India has always shown great recovery from the challenges it currently faces. The overall growth numbers are not going to necessarily be that bad off either. There are still so many areas that we need to continue forcing on if we are to sustain the pace set so far, she said.
Sitharaman also appreciated Prime Minister Narendra Modi’s being very active during calamities. “During Covid-19, it was proved again that a problem can be used to bring about change. The five mini-budgets have given relief measures, supportive measures, and handholding with a twin agenda of implementing pending reforms,” she added.
Her remarks can be viewed against the backdrop of international and domestic factors influencing economic activities and growth sustenance of India in the next quarters.
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