Breaking: Growth Slips To 4.5% In September Quarter Of 2019-20

The GDP continued its downward trend for the seventh consecutive quarter, slipping to 4.5 per cent in the second quarter (July-September) of the year 2019-20. The GDP growth stood at 7.1 per cent in the same quarter last year.

The growth seen in the last quarter was slowest in more than six years. The previous low was recorded at 4.3 per cent in the final quarter (January-March) of 2012-13.

Several factors have contributed to the slowdown, including a decline in private consumption, investment and export. However, the key indicator is the lack of credit growth and demand in the market.

The GDP numbers were released today, along with the data for the eight-core infrastructure industries, which showed a decline in output by 5.8 per cent in October. As many as six of the eight core industries witnessed a contraction in output in October. Coal was the worst hit, declining steeply by 17.6 per cent.

The GDP numbers for the July-September quarter slipped further after the growth rate for the first quarter of 2019-20 settled at 5 per cent, a six-year low. The slowdown in economic growth has snatched the tag of the world’s fastest-growing major economy from India.

The Narendra Modi government has taken a slew of reforms in recent months to boost credit in the market, focusing on offering incentives to banks to increase lending.

These measures include slashing of the lending rate by the Reserve Bank of India five times this year, withdrawal of ‘super-rich surcharge’ imposed on foreign investors, exemption of start-ups from ‘angel tax’, an infusion of Rs 70,000 crore in public sector banks and a significant cut in the corporate tax rate.

However, analysts and experts still remain of the view that the government did not do enough to address the issue of a slowdown in demand. They argued that declining demand is among the major reasons for the economic slowdown.

The concern expressed by economists is in sync with what Union Finance Minister Nirmala Sitharaman said earlier this month. She claimed that the economy will revive soon, asserting that the government was doing everything possible.

“It is too presumptive of me to say it (economic slowdown) has bottomed out,” Sitharaman had said earlier this month.

Also Read: SBI Confirms Economic Slowdown, Drops India’s GDP Growth Forecast To 5% For FY20