India’s prolonged slowdown appears to be deeper than anticipated as the country’s growth has been sharply revised down by 0.7 percentage points. According to the earlier estimates, the GDP growth rate in the previous year was 6.8 per cent, which was already at a five-year low. Now, the GDP growth of the last fiscal year has been further lowered to a mere 6.1 per cent, according to the First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2018-19. In the contrast, the low GDP growth of the previous year may improve the base effect that can push the current fiscal’s GDP growth figures.
Going by the revised estimates, the GDP growth rate for FY18 also stood 7 per cent, which was recorded at 7.2 per cent. This is the second revised estimate for this year. Earlier this month, the government had released the estimates that pegged the current year’s GDP growth at 5 per cent.
“The GDP growth for FY2019 has been revised down to 6.1% from 6.8%, led by private consumption. The growth rates for FY2019 may well undergo additional changes once the data from the Annual Survey of Industries becomes available,” said Aditi Nayar, Principal Economist, ICRA. Revised quarterly data, which would be released subsequently, will aid in the assessment of which period led the downward revision in GVA growth for FY2019, aiding policymakers in understanding when the growth slowdown set in, she added.
Meanwhile, India’s GDP growth has been continuously falling for the past six quarters and the FICCI Economic Outlook survey has said that it may take up to another six quarters for the economy to come back to its full swing. The slowdown has hit the economy on almost all the quarters and the scars of slow growth are visible across industries. Factory output has barely expanded after continuously contracting for the three months to October 2019.