India's GDP growth rate continued its downslide for the fourth quarter to 5% in the first quarter of FY 2019-20. It’s down from 5.8% in fourth quarter of FY 2018-19. In the first quarter of the previous financial year, the GDP growth was 8.2%. This effectively means that the country's growth rate has fallen by 3% in barely a year's time. This is the fourth successive decline in the GDP, from 8% in the first quarter of FY19 to 5% in this quarter. It is also the slowest growth since Q1 in 2013.
According to the National Statistical Office (NSO), the GDP at 'Constant (2011-12) Prices' in Q1 of FY2019-20 is estimated at Rs 35.85 lakh crore as against Rs 34.14 lakh crore in Q1 of 2018-19, showing a growth rate of 5%.
A statement by the NSO said that electricity, gas, water supply, utility services, trade, hotels, transport, communication and services related to broadcasting, public administration, defence and others recorded a growth of 7% in Q1. Agriculture, forestry and fishing grew at 2%, mining and quarrying grew at 2.7%, manufacturing at 0.6%; and construction and real estate grew at 5.9%.
With most indicators pointing to weak domestic demand and tepid investment climate, a slip in GDP in the April-June quarter was expected.
Prior to the numbers being released, India Ratings attributed the lacklustre performance primarily to a slowdown in consumption demand, delayed monsoon, decline in manufacturing and rising global trade tensions affecting exports.
Other firms also presented equally negative outlook of the economy. A Goldman Sachs report had said that the current slowdown lasted for 18 months as of June, 2019 — making it the longest episode since 2006. It further said that policymakers have acted to mitigate the current slowdown but policy responses seem less aggressive compared with earlier episodes, with fiscal restraint so far.
On August 23, the government announced a slew of measures to boost the economy and lift investor sentiment. Among the measures steps included roll-back of enhanced surcharge on foreign portfolio investment (FPIs) and upfront transfer of Rs 70,000 crore for recapitalisation of public sector banks to give them firepower for lending.
Most lead indicators such as car sales, core sector data, jobs and services growth suggested that the Indian economy is in the grip of a slowdown. It is increasingly becoming a challenging task for the government to put the economy in high growth orbit to realise its potential of 8% annual growth on a sustained basis.
With IANS inputs