The economic slowdown is narrative and it is visible in the quarter from April to June 2019 that revealed a 5% unimpressive growth. There is apparent stumble these days in India’s economy.
GDP First quarter
Growth has come down for the two consecutive quarters. The GDP in the first quarter was less impressive marking slowest growth since FY13 fourth quarter. The nominal GDP growth without adjusting for inflation escalated to 8%, while the current national accounts indicate a deep slowdown.
Smallest growth ever
Consumption in the recent few years presents the bedrock of growth now collapsed to 3.1% from 10.6%, which is an 18-quarter low in the March quarter, showing a fragile sentiment. In the previous quarter, there was a small growth in investments showing a growth of 4% from 3.6%. The investment and consumer requirements have slowdown and derailed manufacturing that showed a 0.6% growth. A 2% meager rise in farm sector further supplemented to the slowdown of the demand.
RBI had lowered marginally the growth projection of GDP from 7% to 6.9% for 2019-20. The central bank also has emphasized the need for growth concerns by addressing the aggregate demand.
GDP growth rate has revised downwards this year. Observers expected a GDP growth rate for the previous quarter of 5.4% and 6.4%.
The GDP growth includes the not so great news from many other sectors such as the everyday consumables and automobiles falling sales. Even so, Q1 came as 5% official GDP data and it was shocking and economists agree that by 2024 to dream of 5 trillion-dollar the economy there is a necessity of 9% at least annual growth.
IMF spokesman Gerry Rice responded recently to a question about the Indian GDP figures that ‘India has much weaker economic growth than anticipated and this is due to environmental and corporate regulatory lingering weakness and uncertainty in non-banking financial companies’.
Rice also said ‘IMF will monitor the country’s economic situation as the risks are tilted towards the downside’.
Government in action
The government is taking necessary steps and Krishnamurthy Subramanian, the chief economic adviser said, ‘we should be back soon to the path of high growth’ and pointing to electricity the growth he said green shoots were visible’.
The government announced measures such as FDI for select sectors, the rollback of tax-a surcharge on foreign investors ensured credit flow to non-banks, bank consolidation, and more capital for banks.
However, independent experts anticipate the continuation of slowdown for a while. Chief economist DK Pant said ‘There is no solution as a quick fix to downturn the past few years making’ and it includes structural and cyclical factors pointing to the decline.
‘Major Reforms Still Needed’’’
Nirmala Sitaraman, India’s finance minister announced a few measures to stimulate growth across sluggish sectors. Nevertheless, experts are unsure if these measures will be proving. The government has liberalized in many sectors, foreign direct investment rules to get on track the economic growth back.
This was substantiated by KV Subramanian, the Chief Economic Adviser that ‘The government is alive to the situation and we should be back soon to the high growth path’.