India’s GDP Data for April-June 2024-25: Mixed Expectations Amid Heatwaves and Elections
New Delhi, India – The government is set to release its GDP data for the first quarter (April-June) of FY 2024-25 on Friday. Expectations are mixed due to various economic factors, including recent heatwaves and the ongoing election cycle, which may have slowed growth.
However, a report by Equirus Securities remains optimistic, noting no clear signs of a slowdown. The report suggests that any temporary holdup could reverse with favorable weather and the upcoming festive season. “While there are no signs of a slowdown, it could be a temporary holdup. However, prospects continue to look upbeat with macros holding up well,” the report stated.
The Indian economy has shown resilience, supported by stable macroeconomic indicators like controlled twin deficits and adequate reserves. Despite challenges from climate conditions and external demand, the overall outlook remains positive. “The temporary slowdown could well reverse with favorable weather and the festive season around the corner,” the report added.
Improving consumer sentiment and a recovering rural economy, as food prices ease and inflation moderates, bolster the potential for a rebound in growth. Improvements in unemployment in July and reduced demand for MNREGS activity suggest the rural economy is balancing out.
The GDP data release comes at a crucial time, with the Reserve Bank of India’s (RBI) policy meeting scheduled shortly after. The term of two external RBI members, known for their dovish stance, is ending, raising questions about future monetary policy. If replaced by more neutral or hawkish members, the RBI’s approach to rate cuts could be affected, potentially extending the pause on monetary easing. “The term of the three external RBI members is coming to an end. Their term ends on October 4th, while the next policy meeting is on October 9th. Note that Dr. Das’s term also ends in December 2024. Therefore, any policy action may be in the hands of the incoming governor in 2025,” the report noted.
While expectations for India’s GDP data are tempered by recent challenges, the overall economic landscape remains promising. The interplay of seasonal factors, policy decisions, and external conditions will be critical in shaping India’s future growth trajectory.
India’s GDP surpassed expectations, standing at 7.8% in the January-March quarter. The full-year 2023-24 GDP was revised upwards to 8.2% from the second advance estimate of 7.6%, according to the Ministry of Statistics and Programme Implementation. Real GDP soared to Rs 173.82 lakh crore in 2023-24, compared to Rs 160.71 lakh crore in the previous fiscal year.
Doubts Revealed
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country in a specific time period.
FY 2024-25 -: FY stands for Fiscal Year, which is a one-year period governments use for accounting and budget purposes. FY 2024-25 means the fiscal year starting from April 2024 to March 2025.
Heatwaves -: Heatwaves are periods of excessively hot weather, which can affect people’s health and the economy, especially in agriculture.
Equirus Securities -: Equirus Securities is a financial services company in India that provides investment banking, research, and advisory services.
Macroeconomic indicators -: Macroeconomic indicators are statistics that show the overall health of the economy, like inflation, unemployment rates, and GDP.
RBI -: RBI stands for Reserve Bank of India, which is the central bank of the country. It manages the money supply and interest rates.
Monetary policy -: Monetary policy refers to the actions taken by a central bank, like the RBI, to control the supply of money and interest rates to achieve economic goals.