India's Economic Growth Stutters Amid Global Uncertainty

India’s economy grew by 5.4% in the second fiscal quarter ending September, marking its slowest pace in nearly two years. This figure fell well below expectations, with economists forecasting 6.5% growth and the Reserve Bank of India (RBI) predicting a more optimistic 7%. The latest data reflects a slowing momentum after a 6.7% growth in the previous quarter.

Important sectors like manufacturing and mining contributed to the slowdown, signaling challenges ahead. The yield on India’s 10-year sovereign bond dipped to 6.74% from 6.8% after the announcement, highlighting market jitters. At the same time, the repo rate held steady at 6.5%, and with inflationary pressures persisting, the RBI’s Monetary Policy Committee, set to meet in December, may find itself grappling with decisions on the interest rate trajectory.

While the country’s $400 billion stock market loss this week has unnerved some investors, others view it as a good time to get into a high-potential market. Projections for the fiscal year ending March 2025 still look like 7.2% growth is possible, but economists are not convinced the softening over. 

What Does This Mean for Me?

Despite these goings on, India's relative insulation from global trade disputes may work to its advantage. Economists suggest that India, unlike Vietnam or China, could avoid being a focal point in tariff disputes while continuing to attract investment. However, there is still work to be done to navigate inflation, policy decisions, and sector-specific weaknesses.