AGENCIES / WEB DESK
Indian economy or Gross Domestic Product, GDP expanded at lower-than-expected 5% year on year in the April-June quarter, the slowest in over six years, driven by weak investment growth and sluggish demand. In the March quarter, Indian economy at expanded 5.8%. Economists in a Reuters poll had expected GDP to grow at 5.7% in the June quarter.
The manufacturing sector grew at just 0.6% while ‘Agriculture, Forestry and Fishing’ sector at 2%. The ‘Mining and Quarrying’, ‘Construction’ and ‘Financial, Real Estate and Professional Services’ grew at 2.7%, 5.7% and 5.9%, respectively, during this period.
According to GDP data released by National Statistical Office (NSO) on Friday. Registering a continuous downward spiral, the GDP growth for the first quarter of FY20 has been slowest in more than six years. The previous low in GDP growth was recorded at 4.3 per cent in the January-March quarter of 2012-13.
“GDP at Constant (2011-12) Prices in Q1 of 2019-20 is estimated at Rs 35.85 lakh crore, as against Rs 34.14 lakh crore in Q1 of 2018-19, showing a growth rate of 5.0 percent,” a government statement said.
The less-than-anticipated GDP growth rate puts further pressure on the Modi government to announce meaningful reforms that can bring back the economy on growth trajectory. Finance Minister Nirmala Sitharaman held a press conference today, to address economic slowdown in which she announced multiple mergers of public sector banks. She said the move was aimed at improving liquidity and enhancing economic growth. Sitharaman had held a similar press conference last week where she announced a slew of measures to revive economy.
Sitharaman’s ministry may be particularly worried about the manufacturing sector which is the lead element in dragging the GDP growth down, as indicated by latest data. The manufacturing sector took a massive hit as its GVA (Gross Value Added) at basic prices grew by only 0.6 per cent during Q1 FY20, as compared to 12.1 per cent in Q1 FY19. Similarly, ‘agriculture, forestry and fishing’ also registered a dip in growth rate to 2 per cent from 5.1 per cent during the year ago period. ‘Construction’ sector grew at 5.7 per cent in Q1 FY20, as against 9.6 per cent during Q1 FY19.
Meanwhile, ‘mining and quarrying’ sector registered a rise in growth rate to 2.7 per cent during the period under review, in comparison to 0.4 per cent during Q1 FY19. The economic activities which registered growth of over 7 percent in Q1 of 2019-20 over Q1 of 2018-19 are ‘Electricity, Gas, Water Supply & Other Utility Services’, ‘Trade, Hotels, Transport, Communication and Services Related to Broadcasting’ and ‘Public Administration, Defence and Other Services’.