Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Economic growth of first quarter: Comment on recently released data of economic growth for first quarter of current financial year.
Sep 02, 2016 Related to : GS Papaer-3

Ans :

Introduction-

Recently Government has realised the data on economic growth of the country in the first quarter if current financial year 2017-18. According to released data, the country’s economy grew at a slower pace in the last six quarters at 7.1% for the April-June period. It is sharply down from the 7.9% reported in the previous quarter, Q4 of 2015-16.

Reasons-

  • The main reasons for slower pace of economic growth are tepid agricultural growth, sharp deceleration in construction and infrastructure and a lower share of investment in total output.
  • The growth rate of the eight infrastructure sector witnessed significantly slower pace than earlier.
  • Similarly farm sector fell from 2.6% to 1.8% in comparison to previous year.
  • The construction sector witnessed high fall in its growth rate, it fell from 2.6% to 1.8% in comparison to last year.

Analysis and suggestions-

  • The 7.1% growth is mainly driven by the government spending, while private spending par lower than the expected. It is the main worry, hence government needs to encourage private players to invest through sustained policies.
  • Though India witnessed slower pace of growth rate in first quarter of current financial year, but it can be improved with sustained policies. For example, manufacturing growth is robust, at 9.1%, hence the deceleration in mining is likely to be reversed, with sustained growth in manufacturing.
  • Government spending, which has gone up due to a rise in subsidies, is likely to stay buoyant as the Seventh Pay Commission payout commences. The package of incentives for construction and the accelerated public spending in the roads and railways are likely to boost growth in construction and cause investment to bottom out as a share of total output.
  • Banks should start lending on a large scale, the new focus on corporate bond market and real estate investment trusts should yield additional capital being made available for investment.

Conclusion-

The data of first quarter of current financial year is disappointment with reference to India’s economic growth, but still desired rate can be achieved with sustainable policies and support. India’s economic growth continues to be driven by government spending while private spending remains muted, which is a worry. Hence there is an urgent need to promote private investment and spending.


Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.