Slow growth can mainly be attributed to the weak manufacturing and construction sector. Manufacturing GVA grew by 0.6 per cent, while construction grew by 5.7 per cent.
India’s GDP grew at 5 per cent in the first quarter of the fiscal year 2019-20. Trail of decreasing pace of the GDP growth continued for the fourth quarter in a row, shows the latest MOSPI data. GDP growth rate stood at 5.8 per cent in the preceding quarter and 8 per cent in the same quarter last year. Amid weak demand and a slowdown caused by the domestic and global factors, the market had expected slow growth in Q1 FY20. Slow growth can mainly be attributed to the weak manufacturing and construction sector. Manufacturing GVA grew by 0.6 per cent, while construction grew by 5.7 per cent.
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“The key question that confronts the Indian economy as it looks ahead to the rest of 2019-20 is: are we dealing with a soft patch, or a cyclical downswing, or a structural slowdown? This will determine the policy responses,” said the latest RBI annual report. Several uncertainties have affected the near-term outlook for the global economy and India. The loss of speed spread to different parts as political developments purveyed heightened uncertainty, world trade froze, investment slumped, while manufacturing weakened worldwide.
A Reuters poll had projected the Q1 FY20 GDP growth rate to be at 5.7 per cent on-year. However, the industry body FICCI and credit rating agency projected the Q1 FY20 GDP growth rate at 6 per cent. In an interview this week, Sanjeev Sanyal, Principal Economic Advisor said that the government is aware of the demand-driven slowdown and corrective measures are being taken to revive the economy. The growth figures of the first quarter are expected to show some moderation but it doesn’t affect the government’s target of making India a $ 5 trillion economy, he added.