GDP expected to jump sharply due to private capital expenditure, agricultural growth, rising consumption
Delhi Delhi: According to industry experts, the decline in India’s second quarter GDP growth is temporary, due to seasonal monsoon impact and election-related factors, and should start improving by the January-March period (Q4) of FY25. For equity markets, this data is unlikely to have any significant impact. “Any short-term deterioration in market sentiment could provide an opportunity for investors with surplus funds to build long-term positions, given the underlying strength in key consumption and services sectors,” said Dr Vikas Gupta, CEO and Chief Investment Strategist, OmniScience Capital. The data has several encouraging signs, such as private consumption growing at an impressive 6 per cent, significantly higher than both the overall GDP growth rate and the 2.6 per cent recorded in Q2 of FY24.
“This dispels recent concerns about weakness in private consumption. Government consumption improved compared to the previous quarter but was lower than the same period last year, possibly reflecting cautious spending ahead of elections,” Gupta said. The primary sector showed stability with modest GVA growth, although mining was impacted by the monsoon. In the secondary sector, the construction sector continued to perform strongly. The tertiary sector grew the most, rising at a robust 7.1 per cent rate, reflecting the resilience of private and government consumption.
According to Bank of Baroda economist Jahnavi Prabhakar, despite the overall slowdown, private consumption recorded a robust growth of 6 per cent in Q2 FY25, up from 2.6 per cent in Q2 FY24. “The agriculture sector showed a robust growth of 3.5 per cent in Q2 FY25, as against 1.7 per cent in Q2 FY24, supported by favourable monsoon and higher kharif output. “A sharp rebound is expected in H2 FY25 led by government and private capital expenditure, strong agricultural growth and rising consumption demand, with GDP growth for FY25 estimated at 6.6-6.8 per cent,” Prabhakar noted. According to high-frequency indicators, real estate demand remains stable. Both buyer interest and developer sentiment towards the real estate market remain stable.
