Experts see GDP growth below 6.5% in second quarter

DK Srivastava from EY raises concerns about CPI inflation rate, which stood at 6.2% in October, alongside an expected lower GDP growth of 6.5% for Q2. He said, “Main reason for growth slowdown is contraction in government’s capex at (-)15.4% during April-September 2024.”

Srivastava advocates for a prioritisation of fiscal policy actions, stating, “Accelerated government investment expenditure should be given the highest priority while monetary policy action may be delayed beyond December 2024.”

Gaura Sen Gupta, chief economist, IDFC First Bank, pegs Q2 GDP growth at 6.2% due to moderation in manufacturing sector growth.

“Listed companies results show fall in profit in Q2 with slowdown in revenue. Urban demand weakness persists with softer FMCG sales growth, consumer goods production and fall in passenger vehicle sales,” she added. Madhavi Arora, chief economist at Emkay Global, suggests Q2 GDP may come in at 6.3%.

She stated, “Urban wage bill growth has been declining on real basis for over one-and-a-half years and currently is well below five-year pre-COVID average of 9%. The fall in income capacity of urban sector has hit consumption profile, albeit with a lag.”

Madan Sabnavis, chief economist with Bank of Baroda, projects GDP growth of 6.8% to 6.9% for Q2FY25, buoyed by strong performance in the services sector.