India’s economy has demonstrated a mixed but overall positive trajectory over recent quarters, facing a temporary slowdown primarily due to election-related uncertainties. In the second quarter of 2024, GDP growth decelerated to 6.7%, a significant dip from the 7.8% growth achieved in the first quarter of the year. This marks the first time in five quarters that GDP growth has fallen below 7%, and while this slowdown was expected, it still raised concerns in some quarters. Consensus forecasts had pegged growth at 6.8%, so the actual figure was only marginally below expectations.
The primary reason for this dip was a sharp reduction in government spending, which slowed considerably during the extensive election process. The elections spanned several weeks and delayed certain public spending initiatives, creating a drag on economic activity. Now that the election period has concluded, it is anticipated that government spending will rebound, providing a much-needed boost to domestic economic drivers such as consumption and investment.
Subscribe!