Chief Economic Advisor V Anantha Nageswaran on Friday said that second quarter GDP growth at 5.4 per cent is disappointing but maintained that overall growth projection for FY25 at 6.5 per cent is "not in danger".
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The Economic Survey projected India's GDP to grow at 6.5-7 per cent in 2024-25, down from a high of 8.2 per cent in the the preceding financial year.
"Real GDP growth print of 5.4 per cent is on the lower side and it is disappointing, but there are some bright spots," Chief Economic Advisor V Anantha Nageswaran said while addressing media on Q2 GDP data.
Agriculture and allied sector and construction sector are some of the bright spot, he said, adding, record production estimates for kharif foodgrains as well as promising rabi crop prospects augur well for farm income and rural demand.
On the basis of second quarter number, it cannot be said that 6.5 per cent number is in danger as the low second quarter number is not a trend, he said.
He exuded confidence that economy shows resilience underpinned by steady demand and strong manufacturing and service sector activity.
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Talking about other bright spot, he said, labour market shows signs of growth, with an easing unemployment rate and expanding formal workforce, with notable increases in manufacturing jobs and a strong inflow of youth into organised sectors.
Better growth in labour incomes holds the key to sustained demand growth and capital formation in the private sector, he said, adding, global crude oil prices remaining low, bodes well for economic activity and price stability.
India's economic growth slowed to near two-year low of 5.4 per cent in the July-September quarter of this fiscal due to poor performance of manufacturing and mining sectors as well as weak consumption.
The gross domestic product (GDP) had expanded by 8.1 per cent in the July-September quarter of 2023-24 fiscal and 6.7 per cent in first quarter of current fiscal (April-June 2024).
The previous low level of GDP growth at 4.3 per cent was recorded in the third quarter (October-December 2022) of financial year 2022-23.
With regard to challenges, Nageswaran said geopolitical conditions remain fragile and may continue to impact domestic inflation, supply chains and capital flows.
Elevated asset prices globally is a risk factor, he said, adding, exports face greater uncertainties due to potential policy development elsewhere and an uncertain outlook for monetary policy and economic growth in advanced economies.
Limits to states' capacity on capex, capital-intensive growth in private corporate sector and the regulatory environment are medium- to long-term risk factors for economic growth, he added.
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