Current Affairs - Economy

In Q2 FY 2024-25, India’s GDP growth rate slowed to 5.4%, marking the slowest growth in seven quarters. This represents a decrease from 6.7% in the previous quarter (Q1 FY 2024-25) and an 8.1% growth in the same period last year (Q2 FY 2023-24). The decline reflects a broad slowdown across various sectors, including manufacturing, mining, and utilities, despite improvements in services such as public administration and trade. The slowdown is a significant indicator of the challenges faced by the Indian economy in this period.

S&P Global retained India's GDP growth forecast for 2024-25 at 6.8%. Despite revisions for subsequent years, this figure reflects confidence in India's economic stability for the stated period. Factors influencing the forecast include high interest rates and a reduction in fiscal impetus, which may dampen urban demand. However, the retained growth rate suggests resilience in other sectors offsetting these challenges.

In October 2024, India's Consumer Price Index (CPI) or retail inflation surged to 6.2%, marking the highest inflation rate since August 2023. This increase was primarily driven by a rise in food prices, with food inflation reaching a 15-month high. Despite global inflation easing, India continued to experience persistent price pressures, which were exacerbated by factors like extreme weather events, global price volatility, and rising core inflation. The surge in CPI surpassed the Reserve Bank of India's upper tolerance limit of 6%.

Zomato, the leading online food delivery platform, will join the prestigious BSE Sensex index, replacing JSW Steel. This development reflects Zomato's impressive growth and significant stock price rally over the past year. The reconstitution, effective December 23, 2024, also includes changes in other indices like BSE 100, BSE Sensex 50 and BSE Sensex Next 50. Zomato's inclusion in the BSE Sensex marks a major milestone, solidifying its position among India's top 30 stocks.

Morgan Stanley has downgraded India’s FY25 growth forecast from 7% to 6.7%, citing weaker-than-expected performance in Q2. However, a recovery is anticipated in the second half of FY25, supported by improved agricultural output and increased government spending. Additional factors such as easing inflation and potential monetary policy adjustments by the Reserve Bank of India in April 2025 are expected to contribute to economic stabilization. Despite the short-term challenges, the firm remains optimistic about growth prospects in the latter part of FY25.