India is one of the world’s biggest economies. It is a matter of pride as it has consecutively topped the charts. However, this growth graph has seen a blow recently, particularly during the second quarter of the financial year 2024-2025. The growth has dropped from 7% to 5.4% during the July-September period. What factors led to this slowdown and what lies in the future? Let’s look at it in detail.

The Current Scenario in India’s GDP Growth

As mentioned above, India’s GDP rate fell to 5.4% during the second quarter of the current financial year. This has been the lowest in seven quarters. When looked deeply, many factors are recognised to affect this fall, such as:

1. Manufacturing and Mining, two of the major sectors, saw a major fall in growth. This could be because input costs grew too much as opposed to nominal or muted demand. The industrial sector, especially, saw a dramatic drop from 7% to 2.2%.
2. The government also spent less capital on infrastructure and other areas owing to the elections, which seriously affected the country’s GDP growth.
3. Above all, retail prices saw a surge leading to inflation, even beyond RBI’s expectations. As usual, price hike affects consumer behaviour, reducing demand and thereby GDP rate.
4. Another reason could be a slowdown in global trade.

A Glimmer of Hope

The statistics above tell that the second quarter has been a challenging one, with growth falling suddenly and quickly. However, after a deep analysis, experts are hopeful of a recovery and bouncing back to normal. These assumptions are not baseless and arise out of well-studied factors like:

1. Even though major sectors’ growth has fallen, some service sectors are still on the rise. These form about 60% of India’s GDP and sectors like IT and real estate are in full action.
2. Favourable monsoon conditions played a huge role in agricultural growth, supporting rural demand.
3. With the rising inflation, there is still hope for recovery because of RBI’s stance to maintain stable interest rates.
4. Though by far the government has spent less on infrastructure, growth is still possible if capital is spent on this avenue in the remaining fiscal year.

Conclusion

India’s current GDP growth rate is dicey and full of obstacles, while still being hopeful. Economists have mentioned a drastic drop in numbers, though a recovery is possible if all factors are meted out timely. Major activities are suggested to bring the growth rate up to the normal digits at least. While some factors have led to a downfall, various others could lead to an uprise if taken seriously.

All said, the economy’s fun lies in its dynamism. A nation’s economy is bound to rise and fall. It is up to the citizens and government how to bring it up when it goes down. Currently, India’s GDP may have faced a setback but it will be back on track very soon.

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