Prime Minister Narendra Modi's first day at work in his second tenure has thrown up a tough challenge - the economy is slowing down at a wild pace. The Gross Domestic Product (GDP) estimates for the January-March quarter of financial year 2018-19 was recorded at 5.8 per cent, government data showed. This happens to be lowest growth rate in the past five financial years.
"GDP at Constant (2011-12) Prices in Q4 of 2018-19 is estimated at Rs 37.20 lakh crore, as against Rs 35.15 lakh crore in Q4 of 2017-18, showing a growth rate of 5.8 percent," the government said in a statement.
This also means India is no longer the fastest growing major economy in the world. China is ahead at 6.4 per cent GDP in the March quarter. India's GDP estimate for the entire financial year 2018-19 was 6.8 per cent.
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The latest figures will be a major cause of concern for both prime minister Modi and Nirmala Sitharaman, who has been appointed as the new Finance Minister. The lower GDP growth figures are attributed to weaker domestic consumption, slower global growth and tensions between the United States and China.
The Indian economy reported continuous decline in GDP growth rate over the quarters as fiscal 2018-19 progressed, government data showed. The GDP growth rate has constantly declined from 8.0 per cent in the April-June quarter of FY19, to 7.0 per cent in the July-September quarter, and 6.6 per cent in the October-December quarter.
As per government data, the Indian economy is estimated to grow at a rate of 6.8 per cent during the financial year 2018-19 after a downward revision from government estimate of 7.0 per cent in February. The Indian economy had grown at 7.2 per cent in the previous financial year.
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An industry analysis showed all sectors except manufacturing, construction, and financial, real estate and professional services to experience slowdown during the fiscal.
Agriculture, forestry and fishing sector has shown a growth rate of 2.9 percent as against previous year's growth rate of 5.0 per cent. The mining and quarrying sector on the other hand has shown a growth rate of 1.3 percent as against previous year's growth rate of 5.1 per cent.
Electricity, gas, water supply and other utility services is estimated to grow at 7.0 percent as against previous year's growth rate of 8.6 percent. Trade, hotels, transport, communication and services related to broadcasting sector is estimated at 6.9 percent as against previous year's growth rate of 7.8 percent. The public administration, defence and other services sector has shown a growth rate of 8.6 percent as against previous year's growth rate of 11.9 per cent.
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On the other hand, the growth in the manufacturing sector is estimated at 6.9 percent as against previous year's growth rate of 5.9 percent. GVA at basic prices for 2018-19 from 'construction' sector is estimated at 8.7 percent as against previous year's growth rate of 5.6 percent. The 'financial, real estate and professional services' sector has shown a growth rate of 7.4 percent as against previous year's growth rate of 6.2 percent.
Meanwhile, the fiscal deficit for financial year 2018-19 came in at 3.39 per cent of GDP. It was marginally lower than 3.4 per cent estimated in the revised estimates of the Budget, mainly due to increase in non-tax revenue and lower expenditure. In absolute terms, fiscal deficit at the end of March 31, 2019, stood at Rs 6.45 lakh crore as against Rs 6.34 lakh crore in the revised estimates of Budget.
Although in absolute terms the fiscal deficit has gone up, but as a percentage of GDP the deficit figure has come down marginally, mainly on account of GDP expansion in 2018-19.
(Edited by Vivek Punj)