India’s Q1FY20 economic growth slips to over six-year low of 5%

31 Aug 2019 Evaluate

Continuing downward turn, India's economic growth has slumped for the fifth straight quarter to an over six-year low of 5% in the first three months (April-June) of current fiscal year (Q1FY20). The growth slumped as consumer demand and private investment slowed amid deteriorating global environment. The previous low in Gross Domestic Product (GDP) growth was recorded at 4.3% in the January-March quarter of 2012-13. The growth had stood at 5.8% in January-March of 2019 and 8% in April-June 2018. India's GDP growth was behind China's 6.2% in April-June, its weakest pace in at least 27 years.

As per the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation data, GDP at Constant (2011-12) Prices in Q1 of 2019-20 is estimated at Rs 35.85 lakh crore, as against Rs 34.14lakh crore in Q1 of 2018-19, showing a growth rate of 5.0%. Quarterly GVA at Basic Price at Constant (2011-12) Prices for Q1 of 2019-20 is estimated at Rs 33.48 lakh crore, as against Rs 31.90 lakh crore in Q1 of 2018-19, showing a growth rate of 4.9% over the corresponding quarter of previous year. GDP at Current Prices in Q1 2019-20 is estimated at Rs 48.93 lakh crore, as against Rs 45.31 lakh crore in Q1 2018-19, showing a growth rate of 8.0%. GVA at Basic Price at Current Prices in Q1 2019-20, is estimated at Rs 45.14 lakh crore, as against Rs 41.82 lakh crore in Q1 2018-19, showing an increase of 7.9%.

The data showed that the economic activities which registered growth of over 7% in Q1 of 2019-20 over Q1 of 2018-19 are ‘Electricity, Gas, Water Supply & Other Utility Services’, ‘Trade, Hotels, Transport, Communication and Services Related to Broadcasting’ and ‘Public Administration, Defence and Other Services’. Besides, the Gross Value Added (GVA) growth in the manufacturing sector tumbled to 0.6% in the first quarter of this fiscal from 12.1% expansion a year ago. Similarly, farm sector GVA growth remained subdued at 2% as compared to 5.1% in the corresponding period of the previous fiscal. Construction sector GVA growth too slowed to 5.7% from 9.6% earlier. However, mining sector growth climbed to 2.7% from 0.4% a year ago.

Meanwhile, the government's Chief Economic Adviser K V Subramanian has said India's GDP numbers indicate that growth, while still high, has shown some slowdown. Similar phenomenon has been observed previously in the last quarter of 2013-14. He noted that this has been on account of both exogenous and endogenous factors. The government is quite alive to the situation especially global headwinds arising out of deceleration in the developed economic and Sino-American trade conflict which has contributed to the slowdown.

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