India’s economy experienced a sharper slowdown than anticipated in the July-September quarter of 2024, with GDP growth declining to 5.4% year-on-year. This figure falls short of the projected 6.5% and the Reserve Bank of India’s estimate of 7%, marking the slowest growth in seven quarters. The deceleration is largely attributed to a significant downturn in the manufacturing sector, which expanded by a mere 2.2% compared to 7% in the previous quarter.
Several factors have contributed to this manufacturing slump. Urban consumption has weakened due to rising food inflation, elevated borrowing costs, and stagnant real wage growth, despite some recovery in rural demand. Private consumption, which accounts for 60% of GDP, along with agricultural output, both showed decelerated growth during this period. The gross value added (GVA) grew modestly at 5.6%, down from 6.8% in the previous quarter, reflecting broader economic challenges.
