Lower Q2 growth a temporary blip, no production slump: Nirmala Sitharaman

Replying to a debate on the first batch of supplementary demands for grants in the Lok Sabha, the FM also ruled out any “generalised slowdown” in manufacturing, growth in which had slumped to 2.2% in the second quarter.

The lower house later approved the first batch of supplementary demand for grants for FY25, involving an additional net spending of ₹44,143 crore.

Half the 43 manufacturing segments in the index of industrial production remained strong in the previous quarter, Sitharaman said. “Let’s not pick just one quarter and predict the future (growth). There has been steady growth,” she said. “I am very optimistic about improved performance, going forward.”

The country, she underscored, expanded at an average annual rate of 8.3% in the past three years, and in only two of the last 12 quarters, has the pace of expansion dropped below 5.4%.

Citing past trends, the FM underlined that project execution and spending are usually impacted during and immediately after general elections, and that capital expenditure was expected to gain further traction in the coming months. The Centre’s capital spending rose 6.4% from a year before between July and October, after an election-induced contraction in the June quarter.The investment-to-GDP ratio in FY24, she said, rose to 30.8% in nominal terms, from 28.9% in the pre-Covid period (2015-19). Citing a private study, she said investments by some 3,200 private non-financial firms have risen 11.6%.

Inflation & Unemployment
Responding to the Opposition’s criticism on the government’s price management, Sitharaman said the trend over the past 25 years suggested the governments of the NDA have controlled inflation better than those of the UPA.

From 1999 to 2004 (the Vajpayee era), the average headline inflation based on the wholesale price index was 3.9%, which jumped to 5.6% over the next five years under the first UPA government. Under UPA-II, inflation spiked to 10.2%, which nearly halved to 5.3% since Narendra Modi became Prime Minister, she stressed.