GDP Growth Touches Six Year Low, Sinks Over 5% In June Quarter
A day after the RBI lowered the growth forecast for India in its annual report for 2018-19, The Central Statistics Office report released today shows that GDP growth in the April-June quarter fell to 5% – the slowest pace in six and half years.
The poor growth rate is a result of the slowdown in the manufacturing sector and the continued downfall in consumption. The new low in the GDP is also attributed to a slowdown in auto sales. The domestic passenger sales in July took an exponential downturn after a steady decline for the ninth consecutive month.
The manufacturing sector grew at just 0.6%, while ‘Agriculture, Forestry and Fishing’ sector grew at 2%. The ‘Mining and Quarrying’, ‘Construction’ and ‘Financial, Real Estate and Professional Services’ grew at 2.7%, 5.7% and 5.9%, respectively.
Many Rating agencies have cut down India’s growth figures from their earlier forecast. CRISIL had revised India’s growth rate to 6.9 per cent from 7.1 per cent.
In July, the Asian Development Bank said, “The Indian Economy is expected to grow by 7 per cent in 2019 (FY20) and 7.2 per cent in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short.”
In June the International Monetary Fund (IMF) had cut the GDP forecast to 7 per cent from 7.3 projected earlier. This month RBI itself had lowered the growth forecast for the financial year 2020 to 6.9 per cent.
The sinking GDP numbers come a week after Finance Minister Nirmala Sitharaman announced multiple steps to revive the economy. Some of them include removal 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.
The RBI’s give away of Rs 1.76 lakh crore to the government, was also seen as a move to save the economy by many experts. The government is said to use the money to meet the fiscal deficit target of 3.3 per cent.