Q2 GDP slowdown not systemic, says FM Sitharaman

Union Finance Minister Nirmala Sitharaman addressed concerns over India's GDP growth slowdown in the second quarter, asserting that it is not indicative of a systemic issue. Speaking at the India Japan Forum 2024 during a discussion with 15th Finance Commission Chairman N.K. Singh, she attributed the decline to subdued capital expenditure and public spending rather than structural weaknesses. “Q2 GDP is not a systemic slowdown; it is more due to the absence of activity on capex and public spending,” Sitharaman stated. She expressed optimism for a rebound in the third quarter, saying, “I expect Q3 to make up for all this.”
The finance minister contextualized the slowdown, citing the government’s focus on election management in 2024, which she said temporarily overshadowed public expenditure-related activities. She added, “The catalyst for consumption has become slower, which you saw in Q2 growth GDP numbers.” Despite the GDP growth for Q2 dropping to a seven-quarter low of 5.4 percent, Sitharaman expressed confidence in India’s economic trajectory. She highlighted that growth metrics for the year and beyond are likely to remain robust, keeping India on track as the world’s fastest- growing major economy. 
Sitharaman emphasized that global demand, particularly in advanced economies, appears to be holding steady but at subdued levels, creating challenges for Indian exports. She also highlighted domestic improvements in purchasing power while noting that stagnant wages might restrict consumption growth. “We are aware of these trends and their potential implications for India’s economic activity,” she reportedly, remarked.

(Business Correspondent)