New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said the lower-than-expected GDP growth of 5.4 per cent in the second quarter was a “temporary blip” and exuded confidence that the economy will see healthy growth in the coming quarters.
Replying to a debate in the Lok Sabha on the first batch of Supplementary Demands for Grants, she said India has seen “steady and sustained” growth and its GDP growth rate has averaged 8.3 per cent in the last three years.
“The real growth rate for Q1 and Q2 of this financial year (FY25) has been 6.7 per cent and 5.4 per cent, respectively. At 5.4 per cent, the Q2 rate is slower than expected…Q2 of this financial year has been a challenging quarter for India and most other economies of the world,” she said.
India continues to be the fastest-growing major economy in the world, Sitharaman said, adding that the credit goes to the people of India who are struggling and meeting their aspirations, thereby, contributing to the economy.
Terming the second quarter’s less-than-expected growth as a “temporary blip”, she said the economy will see healthy growth in the coming quarters.
The finance minister further said there is no broad-based slowdown in the manufacturing sector. Half of the sectors within the overall manufacturing basket continue to remain strong.
“A generalised slowdown in manufacturing is not expected, as it is restricted to few segments…out of 23 manufacturing sectors in the Index of Industrial Production, about half of them remain strong even now,” she said.
Besides, she said, the capital expenditure of the Union Government has grown by 6.4 per cent between July and October 2024.
The government has allocated Rs 11.11 lakh crore toward capex during the current financial year.
“I think steps that we are taking to push for growth and to sustain growth are going to this route of capital expenditure so that the multiplier effect will spread through the economy and therefore give a greater traction,” she said.
For every rupee spent on the capital account, she said, the multiplier effect sometimes results in touching 4.3, whereas if you spent on the revenue account, for every one rupee, you would get only 0.98.
About inflation, Sitharaman said it is better controlled in the NDA regime, whereas under the UPA, it touched double digits.
Retail inflation in April-October 2024-25 stood at 4.8 per cent, the lowest since the Covid pandemic, she noted.
Core inflation, which excludes volatile food and energy prices, remains at a decadal low of 3.6 per cent, she added.
Sitharaman said the unemployment rate has come down from 6 per cent in 2017-18 to 3.2 per cent now.
Later, the Lok Sabha passed Supplementary Demands for Grants, seeking approval of additional net expenditure of Rs 44,143 crore in the current fiscal, mainly on account of higher spending by agriculture, fertiliser and defence ministries.
The first batch of Supplementary Demands for Grants for 2024-25 sought approval to authorise gross additional expenditure of Rs 87,762.56 crore.
Of this, proposals involving net cash outgo aggregate to Rs 44,142.87 crore and gross additional expenditure, matched by savings of the Ministries/ Departments or enhanced receipts/recoveries, aggregates to Rs 43,618.43 crore.
The additional spending includes Rs 6,593.73 crore towards the fertiliser subsidy scheme, about Rs 9,000 crore for agriculture and farmer welfare, and Rs 8,000 crore towards defence spending.
It also includes expenditure of Rs 3,000 crore towards expenditure by the Ministry of External Affairs and Rs 4,800 crore towards expenditure by the Home Ministry.
