India's Q1 GDP Growth Slows but Surpasses Decadal Average

The State Bank of India (SBI) reports that India's GDP growth for Q1 of FY25 slowed to 6.7%, still above the decadal average of 6.4%. The moderation was due to weaker agricultural and services sector performance. The Q1 nominal GDP grew by 9.7%, indicating expansion in economic value.

According to a recent State Bank of India (SBI) report, India's GDP growth for the first quarter (Q1) of the financial year 2024-25 (FY25) has moderated to 6.7%, yet remains higher than the average decadal growth of 6.4% for the same period. Official data from the Ministry of Statistics and Programme Implementation released on Friday confirms this trend.

This slowdown contrasts with the previous four quarters, where GDP growth surpassed 7%. The report notes, "Though growth for Q1 has reduced to 6.7% YoY, it is still higher than the average decadal growth of 6.4% in Q1." The dip in Q1 growth stems mainly from weaker performances in both agriculture and services sectors. Agriculture, a substantial economic component, grew by just 2.0%, affected by adverse weather conditions and subdued demand.

While the services sector posted a 7.2% growth, it underperformed compared to previous quarters. The weaker performances in these pivotal sectors contributed to the overall slower growth rate in Q1. Despite this, nominal GDP, which includes inflation, rose by 9.7% in Q1 FY25, a marked improvement from the 8.5% growth in Q1 FY24. According to the report, government expenditure grew by 4.1% in Q1, partly inhibited by general election activities. The modest Q1 growth of 6.7% suggests that annual GDP growth for FY25 might need revision from the initially projected 7.2% by the Reserve Bank of India to around 7.0%.

(With inputs from agencies.)