The Congress on Monday said the record GDP growth of 7.8 per cent in April-June 2025 has led to "irrational exuberance" and warned that the “Trump tariff shock” will begin to be felt in the second quarter.
Congress general secretary in-charge of communications Jairam Ramesh said the front-loading of exports to the US by exporters attempting to escape tariffs has actually boosted export growth and therefore the headline GDP number.
“The GDP numbers for the period April-June 2025 have led to irrational exuberance. They do present some contradictions that have been highlighted by a respected bank report and that cannot be brushed aside,” Ramesh said on X.
“Urban consumption is still considerably weak and rural consumption still faces structural constraints,” he claimed.
The nominal GDP growth rate, that is, without adjusting for inflation, is still subdued and is, in fact, markedly lower than in the January-Match 2025 quarter, Ramesh said.
“Consumption, investment and trade are the determinants of GDP growth. But mysteriously a full 1.8 percentage points of the quarterly growth rate is NOT accounted for by these three determinants. This discrepancy is very substantial and needs to be explained,” he said.
Sales growth in the manufacturing sector, as opposed to profits growth, has continued to slow down, Ramesh said.
“The Trump tariff shock is simply not reflected in the first quarter of this financial year - in fact, the front-loading of exports to the US by exporters attempting to escape tariffs has actually boosted export growth and therefore the headline GDP number,” the Congress leader said.
The real consequence of the tariffs will begin to get felt in the second quarter for sure, Ramesh said.
The GDP growth in the first quarter of the ongoing fiscal year was mainly due to good showing by the farm sector, as per government data., according to the latest government data released on Friday.
The Indian economy grew by 7.8 per cent in April-June -- the highest in five quarters, before the disruptive US tariffs were imposed.
The previous highest GDP growth was 8.4 per cent in January-March of 2024, as per the data.
The agriculture sector recorded a 3.7 per cent growth, up from 1.5 per cent in the April-June period of 2024-25, as per the National Statistical Office (NSO) data released on Friday.
