According to government data released on Friday ( 31 May), the Indian economy has grown at its slowest pace since 2014-15. India’s Gross Domestic Product (GDP) slips to 5.8% in the quarter that ended March 2019 from 6.6% in the previous (October-December) quarter. The data also showed that the economic growth rate for FY’19 came in at a five-year low of 6.8%, on the back of a consumption and investment slowdown, reports Business Today.

Subhash Chandra Garg, the Economic Affairs Secretary while addressing a press conference on Friday said, “Slowdown in the fourth quarter GDP was due to temporary factors like the stress in the NBFC (non-banking financial company) sector affecting consumption finance. The first quarter of the current fiscal would also witness relatively slow growth and from the second quarter onwards, the growth and consumption would pick up.”

It signifies that India is no longer the world’s fastest growing economy and has surrendered its title to China which grew at 6.4% in the same period. And it will be a huge challenge for India’s new finance minister, Nirmala Sitharaman (who took charge of the economy just hours before the data was released) to reverse the slump. As per a report by CNN, Shilan Shah, Indian economist at Capital Economics, wrote in a note that Nirmala Sitharaman faces a delicate balancing act to jump-start India’s economy. “She is likely to come under growing pressure to loosen policy to support the economy amid signs that growth has slowed,” she added.

Decline In Consumer Demand

The Hindu reports that the economy’s slow pace was led by sluggish growth in the agriculture, forestry and fishing sector (2.9% growth), the mining sector (1.3% growth) and manufacturing (6.9%). Over the past 15 years, India’s economic growth has been driven by domestic consumption. However, the data released in the last few months show a decline in consumer demand.

According to BBC, the Sales of cars and SUVs have slumped to a seven-year low. Tractor, motorbike, and scooter sales are down. Demand for bank credit has faltered. Growth in fast moving consumer goods (FMCG) have considerably declined in the recent quarters. 

Increasing Unemployment

Another data released a day after the Prime Minister Narendra Modi took oath for the second term, revealed that India’s unemployment rate stood at 6.1% of the total labour force during 2017-18, the highest in 45 years. According to the data, 7.8% of the employable urban youth and 5.3% of employable rural youth was without jobs. In addition to that, 6.2% male and 5.7% females in the country were jobless. The data also showed that the unemployment rate for males was higher in rural areas at 5.8% as against 3.8% for women, while in urban areas the rate for women was 10.8 against 7.1% for men, reports The Hindu.

Also Read: 38% Of The Companies Used In India’s GDP Calculations ‘Not Found’ Or ‘Surveyed’: NSSO Study