Indian Economy: Slowest Growth in Six Years
- 31 Aug 2019
- 2 min read
According to data released by the government, the Gross Domestic Product (GDP) grew 5% in the first quarter of the Financial Year (FY) 2019-20, significantly lower than 8% recorded in the same quarter last year.
- It is the slowest growth in over six years since 2013.
- It marked the fifth straight quarterly decline in growth — the first time since June 1997 that such a prolonged slump has been recorded.
- The slowdown is because of a sharp deceleration in consumer demand and tepid investment.
- Consumption which was the bedrock of growth in the past few years, collapsed to an 18-quarter low of 3.1% from 10.6% in the March quarter of 2018-19.
- Investments grew only 4%, up from 3.6% in the previous quarter.
- This slowdown in investment and consumer demand have further derailed manufacturing, which grew just 0.6%.
- A meagre 2% rise in farm sector added to the demand slowdown.
- Automobile sales, a barometer of the economy, have declined sharply in recent months, forcing production cuts and jobs losses.
- Weak global economy and trade tensions have kept export growth subdued.
- According to the Reserve Bank of India (RBI), the slowdown is cyclical, rather than structural, which would have required deeper reforms.
- The experts believe that policies such as demonetisation and Goods and Services Tax (GST) only worsened things for the informal sector which in turn gave a structural blow to aggregate demand in the economy.
- Recently, the government had already announced a series of measures as part of its efforts to put growth back on track.