India’s growth fell to a five-quarter low of 6.7 percent in the first quarter of the year, compared with 7.8 percent in the previous quarter, according to data released by the government on August 30.

The growth was much more subdued compared with the 8.2 percent jump witnessed in Q1FY24, but in line with the forecast of Moneycontrol poll of 13 economists conducted last week, which had predicted 6.8 percent growth with forecasts ranging from 6 percent to 7.5 percent.

It was lower than RBI's forecast of 7.2 percent for the first quarter.

The economists had predicted that the economy likely slowed down in the first quarter owing to a slowdown in government spending due to election activity in the first quarter and the adverse impact of heatwaves.

Industrial production in the first three months of the year was higher at 5.2 percent compared with 4.7 percent growth between April-June 2024.

But capex utilization has been lower with the government utilizing just 16.3 percent of Budget estimates in Q1FY25 compared with 27.8 percent in the previous year.

“India witnessed a transient lull in investment activity in Q1FY25. For instance, the capital expenditure of the government of India and 22 state governments (capital outlay and net lending for states, except Arunachal Pradesh, Assam, Goa, Gujarat, Manipur, and Sikkim) recorded a YoY contraction of 35 percent and 23 percent, respectively, in Q1 FY25,” said Aditi Nayar, chief economist, Icra in her note prior to the GDP release.

The Indian economy is still likely to grow over 7 percent for the fourth consecutive year in a row.

Moody's Ratings, on August 29, revised India's growth forecast upward to 7.2 percent for 2024 compared with 6.8 percent earlier.

RBI expects the economy to grow 7.2 percent in FY25. Moneycontrol poll has pegged growth at 7 percent for the year.