India’s GDP growth rate slumped to a six-year-low of 4.5%, its lowest since January-March 2013 — marking the fifth successive quarter of decline.
The eight core industries — electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers -- all witnesses a drop in growth. A massive contraction in manufacturing, agriculture and mining pulled India's GDP growth rate down to 4.5%.
Electricity registered a growth rate of 0.4% during Q2 of 2019-20, as opposed to 7.5% in Q2 of 2018-19. The production of cement and the consumption of finished steel saw growth rates of 0.3% and 3.3% respectively during Q2 of 2019-20. This is as opposed to 12.5% and 9.9% respectively, in the same period last year.
Coal, crude oil, natural gas and mining registered growth rates of -10.3%, -5.1%, -2.6% and -1.2% during Q2 of 2019-20. This is as compared to 6.2%, -4.4%, -2% and 0.9% respectively during Q2 of 2018-19.
The manufacturing sector saw a decline of 0.4% in in Q2 of 2019-20 as compared to a growth of 5.6% during Q2 of 2018-19.
The growth rate during Q1 of 2019-20 was at 5%, 5.8% in Q4 2018-19 and 6.6% in Q3 2018-19.
At present, India's economy is facing a severe demand slowdown on account of high GST rates, farm distress, stagnant wages and liquidity constraints. This trend of subdued consumption, referred to as slowdown is being cited by economy watchers as the prime reason for the successive fall in GDP growth rate.
Consequently, all the major sectors including automobile, capital goods, banks, consumer durables, FMCG and real estate have been heavily battered. In terms of production, the output of manufacturing, mining and electricity generation among others have plunged causing job losses.
On Thursday, Finance Minister Nirmala Sitharaman said in the Rajya Sabha: “Looking at the economy with discerning view, you see that the growth may have come down, but it is not a recession yet or it won't be recession ever.”
The GDP growth rate had also been predicted by experts.
Chief Economic Advisor KV Subramanian said that the fundamentals of the economy continue to remain strong and that the GDP growth rate is expected to pick from Q3. However, according to ratings agency ICRA, the slump in growth will continue in Q3 as well.