India's economic growth at 6-year low

Daniel Fowler
November 30, 2019

His subsequent tweet read, "Fact is, ppl who run this government don't care if economic growth falls to 4.5% or 0.5%".

India's annual economic growth slowed to 4.5% in the July-September quarter, its weakest pace since 2013, putting pressure on Prime Minister Narendra Modi to speed up reforms as five rate cuts by the central bank have failed to boost investments. This is the lowest GDP quarter in 6 years.

Commenting on the GDP data, Edelweiss Securities' Economist Madhavi Arora: "The GDP growth softened to 4.5 per cent in 2Q - a tad lower than our expectations of 4.7 per cent".

"Q2 GDP which is at 4.50 per cent indicates a slump in economic activity and it has become quite pronounced after a slip to 5 per cent in Q1".

"Today's weak print was well telegraphed, and while the Reserve Bank of India did not project this kind of weakness, we do not think their view on growth trajectory will change materially", said Rahul Bajoria, senior economist with Barclays Bank Plc in Mumbai. Manufacturing sector's production has registered a decrease of one percent this quarter.

The Ministry of Statistics and Program Implementation said Friday that manufacturing output shrank by 1% compared to 6.9% growth a year earlier.

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Heavy rainfall in August and September, as well as delayed withdrawal of the monsoon, constrained operations in the mining and construction sectors.

In the previous bi-monthly policy review, the governor Shaktikanta Das had hoped that the second half of the financial year might show growth, but is to be seen how can consumer sentiment pick up as the country slows down. All these sectors are counted in the employment generating sectors.

This is a steep decline compared with the seven percent growth recorded in the same period in 2018. Similarly, growth in trade, hotels, transport, communication and other services related to broadcasting has come down from 6.9 percent to 4.8 percent in the second quarter.

The GDP figures released earlier today point that the growth rate of our economy in the second quarter of the current fiscal year is as low as 4.5%. But the growth rate of public service, defense and other services has increased from 8.6 percent to 11.6 percent in the second quarter of past year.

Gross Fixed Capital Formation (GFCF), which is barometer of investment, at constant (2011-2012) prices, estimated at Rs 10.83 lakh crore in Q2 of 2019-20 as against Rs 11.16 lakh crore in Q2 of 2018-19. The fiscal deficit for April-October stood at Rs 7.2 lakh crore versus Rs 6.48 lakh crore, reported The Economic Times. "I don't think the growth has bottomed out, the growth figures may continue to decline the next quarter too, however, post fourth quarter may show some recovery owing to the base effect", Sen said. "After 135 basis rate cut delivered by the RBI since February 2019, we expect the RBI to cut rates by an additional 25 bps in December, taking the repo rate to 4.90 per cent", said analyst at Yes Securities.

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