Slow growth: India’s April-June GDP growth likely to fall again, due to these two main causes

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Updated: August 29, 2019 4:46:55 PM

The sectoral growth in agriculture, industry and services are projected at 2.2 per cent, 3.9 per cent and 7.5 per cent respectively for the first quarter.

economy, GDP projection, Q1 FY20 gdp growth, ficci, icra, services, manufacturing, industry, agricultureThe Central Statistics Office is expected to release the first-quarter GDP figures tomorrow, ie, 30 August. (Bloomberg image)

An evidently ongoing economic slowdown and the high base effect is likely to shadow India’s GDP growth figures for the fiscal first quarter April-June 2019, after the 8 per cent GDP growth rate in the same quarter previous year. A Reuters poll has projected the Q1FY20 GDP growth rate to be at 5.7 per cent on-year, the slowest pace in five years. The Central Statistics Office is expected to release the first-quarter GDP figures tomorrow, ie, 30 August. On the other hand, industry body FICCI has estimated the Q1 GDP growth at a mildly better 6 per cent, which is a little higher than the 5.8 per cent that India clocked in the preceding quarter.   

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The country’s GDP growth has been moderating on account of both global and domestic factors and the prospects over immediate term don’t seem too bright, says the FICCI report. The sectoral growth in agriculture, industry and services are projected at 2.2 per cent, 3.9 per cent and 7.5 per cent respectively for the first quarter, going by the FICCI report.

Credit rating agency ICRA has also projected the Q1 FY20 growth to be 6 per cent, citing a slowdown in the expansion of industry and agriculture as the main reason behind it. “Industrial growth is expected to decelerate sharply to 5.0% in Q1 FY2020 from 9.8% in Q1 FY2019, driven by factors such as weakening domestic demand, a contraction in exports, muted investment activity during the elections and an unfavourable base effect,” said Aditi Nayar, Principal Economist, ICRA.

Finance Minister Nirmala Sithraman has been meeting the industry representatives and has announced many steps such as capital infusion and relaxation in the field of CSR, which may provide some comfort to the businesses. Sanjeev Sanyal, Principal Economic Advisor said in an interview yesterday 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 is expected to show some moderation but it doesn’t affect the government’s target of making India a $ 5 trillion economy, he added.

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