Sluggish growth in the agriculture, forestry and fishing sector (2.9 per cent growth), the mining sector (1.3 per cent growth) and manufacturing (6.9 per cent growth) led the slowdown of economy.
With the Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q4 of 2018-19 estimated at Rs 37.20 lakh crore, as against Rs 35.15 lakh crore in Q4 of 2017-18, showing a growth rate of 5.8 per cent for the January-March quarter of financial year 2018-19, which happens to be lowest growth rate in the past five financial years, the government is expected to focus on improving infrastructure in the full Budget of 2019 to arrest the economic slowdown.
“It is expected that the government would come out with measures which are expected to boost infrastructure so as to combat the slowing economy,” says CA Karan Batra, Founder and CEO of CharteredClub.com.
Sluggish growth in the agriculture, forestry and fishing sector (2.9 per cent growth), the mining sector (1.3 per cent growth) and manufacturing (6.9 per cent growth) led the slowdown of economy. Moreover, with China ahead at 6.4 per cent GDP growth in the March quarter and India’s GDP growth estimate for the entire financial year 2018-19 at 6.8 per cent, it means India is no longer the fastest growing major economy in the world.
Not only sectors like agriculture, mining etc are under stress, but the National Sample Survey Office’s (NSSO) job survey for 2017-18, that has been released by the Ministry of Statistics and Program Implementation (MoSPI) after a long delay, has shown a spike in the unemployment rate to a 45-year high of over 6 per cent.
The annual report (July 2017-June 2018) of the Periodic Labour Force Survey (PLFS) pegs the all India unemployment rate at 6.1 per cent in the given year. Unemployment was higher in the urban areas as compared to the rural as the data showed that 7.8 per cent of the employable urban youths and 5.3 per cent of employable rural youths were without jobs.
A budgetary stimulus to infrastructure is also expected to create jobs, along with providing boost to the economy.
Apart from slowing economy and high joblessness, another concern is fall in exports in high-performance sectors such as gems and jewellery and engineering products. While the overall goods exports slowed down by 0.64 per cent (year-on-year) to $26.07 billion in April, imports recorded a 4.48 per cent growth to $41.4 billion in the month resulting in widening of trade deficit to $15.33 billion.
According to estimates by the Commerce & Industry Ministry, India’s export performance in April is in stark contrast to exports growing at 11 per cent in March to $32.55 billion, which was the highest monthly performance.
To counter the problem of widening of trade deficit, the government is also expected to provide budgetary support to boost exports. “The government may relook at the SEZ Policy as well, which will boost exports,” said Batra.
However, with a high deficit of about 15 per cent in direct tax collection, there is little scope that the government would dole out any tax sops.
When asked if anything is expected on income tax or capital gain tax from the upcoming Budget, Batra said, “The expectations about change in Income Tax Slabs and Capital Gains Tax are low, as the government had already announced the same in the Interim Budget.”
“Moreover, the government is already struggling to meet its target and therefore it is unlikely that the govt will give more relief,” he added.