India’s Q1 GDP slowed to 6.7%, driven by slow govt spending

Q1 GDP Data: The much-anticipated GDP data for India's April-June 2024 quarter stands at 6.7 per cent YoY, according to the latest data released on Friday. As expected, GDP growth slowed to 5 quarter low at 6.7 per cent and is in line with the projected forecast by economists and analysts. The growth in the same period last year stood at 8.2 per cent.

In the April-June quarter, the growth slowed due to the contraction in government capital expenditure due to elections and the fall in urban consumer confidence. The gross value added has grown by 6.8 per cent in Q1 of FY25 against 8.3 per cent in Q1 of the previous financial year.

“While the 1QFY25 GDP growth has come in softer than expectations, the GVA has remained firm, with non-farm growth holding up well. We retain our GDP growth expectations of 6.9 per cent in FY2025, aided largely by rural demand and government spending while closely watching the likely fatigue in urban demand, private capex and pace of global slowdown,” Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank said.

As per the government release, this GVA growth in the Q1 of FY 2024-25 has been driven by significant growth in the Secondary Sector (8.4 per cent), comprising Construction (10.5 per cent), Electricity, Gas, Water Supply & Other Utility Services (10.4 per cent) and Manufacturing (7.0 per cent) sectors.
The government showed that gross fixed capital formation, a proxy of investment, has risen from 34.6 to 34.8 per cent of GDP in the Q1 of FY25. Similarly, the government expenditure has declined from 10.2 per cent in Q1 of FY24 to 9.5 per cent in Q1 of FY25.