Q2 GDP slowdown was a temporary blip: Nirmala Sitharaman
What's the story
Finance Minister Nirmala Sitharaman informed the Lok Sabha on December 17 that the government views the GDP growth slowdown in Q2FY25 as a "temporary blip" and expects improvement in the coming quarters. Her response came as a reply to the discussion on 'Supplementary Demands for Grants - First Batch 2024-25 in Lok Sabha.' India's GDP growth fell to a seven-quarter low of 5.4% in the second quarter of FY25, a significant drop from the 6.7% growth in the first quarter.
Global context
India's economic performance amid global challenges
Sitharaman highlighted that the second quarter was difficult not just for India but for many global economies. She stressed on India's consistent economic performance, with an average GDP growth rate of 8.3% over the last three years. Addressing concerns over the slowdown of the manufacturing sector, Sitharaman clarified that it isn't generalized and is limited to a few sectors. In Q2, mining contracted by 0.1% (first deceleration in two years) while manufacturing slowed down drastically to 2.2% from 7% earlier.
Economic indicators
Sitharaman highlights improvement in inflation, employment levels
On inflation, Sitharaman noted that retail inflation has been better controlled under the current government than previous ones. She said retail inflation was at 4.8% from April to October 2024-25, the lowest since the COVID-19 pandemic. In November, retail inflation stood at 5.5%, slightly lower from a previous high of 6.2% in October. Consumer prices remained above 5% for a third consecutive month.