India’s Economic Growth Slows: Challenges Ahead

India's GDP growth slowed to 5.4% in July-September, hindered by a dip in manufacturing and consumption. High inflation and borrowing costs affected urban spending. Despite these challenges, India remains among the fastest-growing economies, with potential recovery expected in the second half of the fiscal year.

India's economic expansion witnessed a sharper decline than anticipated during July-September, registering just a 5.4% increase year-on-year. This slowdown, reflected in data released on Friday, was the most sluggish in seven quarters, missing consensus forecasts.

Key factors impacting growth included reduced urban consumer spending, driven by elevated food prices and borrowing costs, as well as sluggish real wage increments. Manufacturing also contracted, growing only 2.2% year-on-year compared to the previous quarter's 7% rise.

Despite these challenges, officials project potential economic recovery later in the year, bolstered by robust rural demand and increased government spending. The agricultural sector has reported a healthy 3.5% growth, and government expenditure has rebounded, though the central bank remains cautious on interest rate changes due to persistent inflation concerns.

(With inputs from agencies.)