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India’s GDP slows down to disappointing 5-year low, loses the much-coveted tag to China

PW Bureau

The sub-6 percent growth of Q4 is the slowest in five years and comes as a lull in domestic and global consumer demand hit manufacturers and service providers New Delhi: Losing the steam in its growth engine and the tag of the fastest growing major economy to China, India’s Gross Domestic Product (GDP) has slouched to a disappointing 5.8 percent in the fourth quarter of financial year 2018-19. The sub-6 percent growth of Q4 is the slowest in five years and comes as a lull in domestic and global consumer demand hit manufacturers and service providers.

The previous numbers

India’s GDP had settled at 6.6 percent in the third quarter, 7.1 percent in second and 8.2 percent in the first quarter. The Gross Value Added for the fourth quarter of FY2018-19 stood at 5.7 percent.

Key factors responsible for bringing a slowdown

A weak domestic consumption, coupled with global growth and an escalating US-China trade war has been listed as key factors by experts that arrested India’s growth momentum. This is the first time that India’s growth has fallen below China. Even after emerging as the world’s sixth-biggest auto manufacturer, India has underperformed in the manufacturing sector and has expanded production of smartphones.

Task cut out for Nirmala Sitharaman

The figures emerged on a day when Prime Minister Narendra Modi allocated Finance Ministry to Nirmala Sitharaman. The minister has, however, inherited an economy in shambles and has a task cut out for her as the economy stares at the possibility of the worst slowdown in five years.

RBI expects GDP for FY20 to be at 7.2%

In the first bi-monthly policy of RBI, it projected a GDP growth of 7.2 percent for 2019-20 — 6.8-7.1 percent in H1:2019-20 and 7.3-7.4 percent in H2, with risks evenly balanced. A survey by Ficci projected an annual median GDP growth forecast for 2019-20 at 7.1 percent and the projection for fiscal 2020-21 at 7.2 percent. (Photo Credit: Saurabh Das/AP)