High deflator, too, behind muted GDP growth in Q2

The surprisingly low real GDP growth print of 5.4% for the second quarter was largely due to low government spending, particularly capex, and lackluster manufacturing activity.

- PRIYANSH VERMA

But one more aspect played a key role in further depressing the number—the deflator, which normalized in H1 after being significantly low in FY24.

The deflator is a comprehensive measure of inflation in the economy. It's an index constituted with WPI and CPI inflation figures, broadly in the ratio of 65:35, and is then compared with the previous year's index to get the growth figure.

According to analysts, the July-September growth figure, which was about 100 basis points (bps) lower than market expectations, was also a direct consequence of a high deflator, at 2.25 (year-on-year growth in %) for Q2; and in Q1FY25, it was close to 2.