oppn parties Is The Economic Slowdown Intensifying?

News Snippets

  • For the first time in history, Darjeeling loses first flush tea due to suspension of garden work for Covid-19 outbreak
  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
  • Small saving rates slashed by the government by 140 basis points
  • The Centre says that the exodus of the migrants was stopped to save villages and prevent community transmission
  • The Centre says March 31 will remain the closing date for FY 2019-2020 and no change will be made for Covid-19 disruption
  • Tablighi Jamaat fiasco puts several states on high alert, attendees and their contacts being traced
  • Stock markets recover on the last day of the financial year, but the sentiment remains weak
  • The government says Covid-19 is still in local transmission stage in India
  • Government scotches rumours of extending the lockdown beyond April14. Says no such plan
  • Centre asks states to give shelter and food to migrant workers to stop them from taking to the streets
  • RBI cuts repo rate by 75 bps, the steepest in 10 years
  • Centre writes to states regarding laxity in monitoring people who had arrived from abroad between January and March
  • Kerala reports a spurt in new cases
  • With 124 fresh cases on Friday, the number of reported cases in India stand at 854
  • Five of a family, including a 9-month-old-baby test positive for Covid-19 in Nadia district in West Bengal on Friday
Total count stands ar 3082 as India records 16 Covid-19 deaths, the highest in a single day
oppn parties
Is The Economic Slowdown Intensifying?

By Sunil Garodia
First publised on 2019-03-05 16:18:57

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.