Fall in Q1 GDP numbers led by elections code and restricted govt expenditure: RBI Governor

After the release of first quarter GDP numbers, RBI Governor Shaktikanta Das has once again reiterated that the economy of India remains in good growth. Speaking at the National CA Conference in Bhubaneswar, Odisha, Das allayed the concerns over the recent dip in the GDP numbers and said the same was due to reduced government spending during election time and also on account of slower growth in the agriculture sector. But all other major sectors have grown by more than 7 percent, he added.

Das said, "I would like to say with all humility and sincerity and with all confidence that the Indian growth story is intact." The deceleration in growth was largely on account of contraction in government spending, which has probably been impacted due to the election season, he explained.

India's economy expanded 6.7 percent in real terms during April-June period of the current financial year 2024-25, data released by the Ministry of Statistics and Programme Implementation said. This is a deceleration as compared to the previous four quarters when the economy was consistently growing over 7 percent.

However, the Governor appeared confident that with higher government expenditure in the second and third quarters, the growth projection of the RBI at 7.2 percent for this fiscal was achievable. He pointed to the general rise in many sectors and referred to the increase in private consumption to 7.4 percent in the first quarter from 4 percent during the past quarter, while the rise was in investment sectors at 7.5 percent, industries at 7.4 percent, manufacturing at 7 percent, and services at 7.7 percent. The construction sector grew by 10.5 percent.

Das also pointed out that the agriculture sector, which grew by 2 percent in the first quarter, could see improved performance due to a favorable monsoon season. "Thanks to the monsoon being very good this year. it has really now covered large parts of the country excepting few parts in eastern India," he noted.

Das further nailed India's progress in innovative transformation, especially in the adoption of Fintech and the growth of startups.

(With agency inputs)