Economists have revised downwards India’s growth projections for the fiscal after a marked slowdown in the economy and prophesied that it would be hard to attain a growth rate above 7 per cent for the fourth straight year.

Data released on Friday showed gross domestic product (GDP) grew 5.4 per cent in the July-September quarter, marking a seven-quarter low and falling below consensus estimates and the Reserve Bank of India’s (RBI) projection of 7 per cent.

Goldman Sachs economists Santanu Sengupta and Arjun Varma revised their projection for the fiscal to 6 per cent, down from 6.4 per cent. Barclays lowered its estimate to 6.3 per cent, citing the weaker-than-expected second-quarter data.

India’s Q2 slowdown was attributed to sluggish performance in manufacturing, utilities and mining, alongside muted government capital expenditure.Growth averaged 6 per cent in the first half of the fiscal, leaving an ambitious target of 8 per cent growth in the remaining two quarters to achieve 7 per cent for the full year.

Crisil chief economist D.K. Joshi noted the risks. “A sharper-than-expected growth slowdown in Q2 has tilted risks to our outlook of 6.8 per cent for the current fiscal downwards,” he said.

Emkay Global revised its forecast to 6 per cent from 6.5 per cent, citing a lacklustre manufacturing sector and weak consumer demand.“Despite likely sequential improvement ahead, the slowdown in consumption and industrial activity remains a concern,” said Madhavi Arora, chief economist at Emkay Global.

Aditi Nayar, chief economist at Icra, suggested a recovery in the second half of FY25 but tempered expectations. “The GDP growth likely bottomed out in Q2, and we expect a pick-up in H2. However, led by the lower-than-expected Q2 print, we have cut our FY25 growth forecast by 50 basis points to 6.5 per cent.”

Economic affairs secretary Ajay Seth expressed confidence in a recovery during the second half, pointing to improved high-frequency indicators in October. “Numbers are lower than our potential but not alarming. Growth will be much higher in the third and fourth quarters,” he said.

CEA upbeat

Chief economic advisor V. Anantha Nageswaran underscored India’s long-term growth potential, projecting GDP growth of 6.5-7 per cent for the fiscal, supported by infrastructure development and financial inclusion efforts over the past decade.

The Economic Survey projected GDP to grow at 6.5-7 per cent in 2024-25, down from a high of 8.2 per cent in 2023-24.