In India, the expectation of higher GDP growth in Q2 (the second quarter) compared to other quarters can be attributed to several key factors:
Festival Season Impact: Q2 typically includes the festival season (e.g., Diwali, Dussehra), which boosts consumer spending and retail activity. People tend to buy more goods, leading to increased demand for products, retail services, and hospitality. This surge in consumption can drive up economic activity and contribute to stronger GDP growth.
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Agricultural Output: Q2 generally aligns with the end of the monsoon season, and the agricultural sector often experiences a pick-up in production. The harvest season, particularly for crops like rice, wheat, and pulses, can increase output and contribute to GDP growth, especially in rural areas.
Government Spending: The government often ramps up spending in Q2 to meet fiscal year-end targets, making additional investments in infrastructure, public services, and welfare programs. This injection of public expenditure stimulates economic growth.
Base Effect: GDP growth in Q2 might also benefit from a favorable base effect. If growth was slower in the same quarter the previous year, it creates a lower comparison point, making current growth appear stronger in relative terms.
Post-Monsoon Recovery: The Q2 period (especially after August and September) sees recovery in various sectors affected by the monsoon rains. Construction, manufacturing, and infrastructure projects often pick up pace as weather conditions become more conducive.
In contrast, other quarters may face slower growth due to factors like post-festival slowdowns, lower government spending in non-peak periods, or challenges in specific sectors (e.g., agriculture in the lean season).
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