Economic outlook balanced but reforms need to accelerate

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India’s real GDP growth for Q1:2024 - 25 fell to 6.7%, the lowest in 5 quarters, below the Reserve Bank of India’s (RBI) estimate of 7.1%.

The fall in GDP growth reflects a slowdown in economic momentum, although gross value added (GVA) grew slightly higher at 6.8%.

Public expenditure and private consumption

The government’s plan to raise capital expenditure by 17% has been hampered by the general election, which requires intensive efforts to meet expenditure targets.

Meanwhile, private consumption rose to a six-quarter high of 7.4% on the back of easing inflation, although food prices remain high.

Uncertain monsoon impact

The monsoon, though better than last year, has been erratic, hurting agricultural growth. Agriculture GVA grew to 2% but the coming weeks will determine the sector's recovery and its impact on food inflation. RBI is concerned about the loss of a potential 1% GDP growth if interest rate cuts are delayed.