oppn parties Is The Economic Slowdown Intensifying?

News Snippets

  • Imran Khan raises nuclear war bogey again, says if Pakistan loses a conventional war, it might fight till the end with its nuclear arsenal
  • Searching for Rajeev Kumar, ex-CP, Kolkata Police, the CBI approaches state DGP to know about his whereabouts
  • Ferry overturns in the river Godavari in Andhra. 46 feared dead
  • Supreme Court to hear pleas on Jammu & Kashmir today
  • Ghulam Nabi Azad moves Supreme Court for ordering the government to allow him to visit his family in J&K
  • GST Council meeting to focus on leakages and evasions, expected to tighten processes, especially regarding input tax credit
  • Finance minister, citing figures for July 2019, says that industrial production and fixed investment is showing signs of revival
  • Amit Shah's comment on Hindi as the unifying language draws the ire of MK Stalin and Siddaramaiah. Stalin says the country is India not Hindia
  • On Hindi Diwas today, Amit Shah says use of mother language must be increased but Hindi should be adopted as the common language of the country
  • Pakistan raises white flag on LoC to claim bodies of dead soldiers
  • India beat Bangladesh by 5 runs to lift the U-19 Asia Cup
  • A three-judge bench of the Supreme Court will examine the amendments to the SC/ST act made after an apex court order that 'diluted' the provisions and which were reinstatd by the amendment
  • Delhi government decides to re-implement the odd-even system of traffic management from November 4 to 15
  • UP to discontinue law that allows the state government to pay the income tax dues of ministers
  • Anand Sharma of the Congress to replace P Chidambaram on the parliamentary committee on home affairs
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
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Is The Economic Slowdown Intensifying?

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
The Indian economy is slowing down. Latest figures for the October-December quarter released by the Central Statistics Office confirm this. GDP has grown at only 6.6 percent in the third quarter this year, forcing a revision of the full year estimates to just 7%. This means that the last quarter growth will be just 6.5%, the lowest in 7 quarters. Full year gross value added (GVA) will only be at 6.85% which means that for three consecutive years, India will have a sub-7% GVA growth.

The drastic fall in agriculture and fisheries, from 4.2% in July-September to 2.7% in the third quarter is a cause for worry. Given the acute farm distress, falling rates show that the distress will intensify. This also means that rural incomes are falling and consumption will go down. Couple this with the reported shortfall in the sowing of the rabi crop and there is no doubt that farmers will continue to bear the brunt for a longer than expected time. Consumption spending data from the hinterland shows a drastic fall in demand.

Manufacturing is not rosy either. GVA in this sector has gone down to 6.7%. It was 6.9% in the second quarter and a robust 12.4% in the first. The Index of Industrial Production (IIP) shows the growth at 2.7% and it is drastically down from the 8.7% achieved in the same quarter last year. Only gross fixed capital formation (GFCF) expanded by 10.6% against the 10.2% logged in the second quarter. Fresh and big investments from the government are also not expected as it is in the last leg of its term and has already gone beyond its fiscal deficit targets.

These figures, when juxtaposed with the slowdown in China and Europe, the upcoming general election in the country and the worsening relations between India and Pakistan, do not raise hopes of an early economic recovery. With inflation in check, it is now upon the RBI to give a push to investment by making a bigger rate cut than the token 0.25 percentage points it made the last time. But one feels that in the absence of a huge rise in demand for goods and services, any rate cut will not cut much ice with investors. Since demand is not going to rise in a hurry, we are in for a period of consolidation. Things will probably improve from the second quarter next year with a new government in place and buoyancy for the September to November festival season.