The robust economic growth narrative of the country, marked by an impressive 8.2% expansion in FY24, is undergoing a massive recalibration. The initial optimism has given way to concerns as economic momentum slows, prompting downward revisions from prominent institutions like the International Monetary Fund (IMF). This shift in perspective underscores the complexities of India’s economic landscape and raises questions about the sustainability of its high-growth trajectory.

The most recent indicator of this slowdown is the dip in GDP growth to a seven-quarter low of 5.4% in the July-September quarter. This figure falls considerably short of earlier projections, signalling deeper underlying issues than initially anticipated. This deceleration has triggered a wave of downward revisions from various economic bodies, casting a shadow over the previously bright outlook.

The IMF, in its latest World Economic Outlook, has taken note of these developments and adjusted its growth projections for India accordingly. Acknowledging the relative stability of the global economy, the IMF highlights that India’s growth has decelerated more sharply than previously forecast. Specifically, they point to a “sharper-than-expected deceleration in industrial activity” as a primary factor contributing to this slowdown.

This suggests potential weaknesses within the manufacturing sector, a crucial engine of economic growth. The IMF now projects India’s growth to moderate to 7% in 2024, and further to 6.5% in 2025. This persistent downward trend suggests that the factors at play are not merely transitory but may be more structural in nature.