Table of Contents
CONTEXT
- India’s July-September 2019 (Q2) gross domestic product (GDP) growth rate fell to 4.5%
- In the 2nd quarter of the previous year, the GDP growth stood at 7.1%
- The GDP growth seen in the last quarter was slowest in more than six years.
- The previous low was recorded at 4.3% in the final quarter (January-March) of 2012-13.
- The GDP numbers for the July-September quarter come after 6 consecutive quarters of falling GDP growth rate.
- The slowdown in economic growth has taken away from India the tag of world’s fastest growing major economy to China.
- India’s growth rates in the Q4 2018-19 and Q1 2019-20 were slower than that of China, which is a much bigger economy.
- Delivering the valedictory address at National Economy Conclave, organised by the Rajiv Gandhi Institute for Contemporary Studies, Dr. Singh said,
- “This is clearly unacceptable and the aspirations of our people want that this country should grow at 8-9% per annum and, therefore, the sharp decline in growth rate from 5% in the first quarter to 4.5% in the second quarter is worrisome.”
WHAT RBI IS EXPECTED TO DO?
- The sharp slowdown in growth is likely to prompt another rate cut by the Reserve Bank of India in the monetary policy announcement due on 5 December.
- These cuts have, however, meant little to nothing for companies and to retail borrowers.
- The cumulative cut of 135 basis points over the last nine months has translated into a meagre 29 basis points (just over a fifth).
WHAT IS THE FUTURE PROSPECT?
- Many experts believe that Q2 of 2019 will be the quarter of bottoming out.
- Since many of the measures to revive the economy has been taken by the government in the month of August &
- The growth is expected to pick from the next quarter of the current fiscal year.
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