GDP growth rate of India 2019: Manufacturers are blaming lacks of demand for less growth
The official data revealed on Thursday that the country’s GDP grew 4.5 per cent in the September quarter. This is sixth straight fall in quarterly GDP growth. India’s GDP grew at a robust 8.1 per cent in January-March 2018. Since then, it has decelerated every consecutive quarter and the July-September quarter figure is the lowest at 4.5 per cent.
The slow GDP rate has disrupted the plans of Corporate India. Companies across sectors, from toothpaste to a car, had primed to plan for a trend growth rate of 8 per cent over the last two decades. Investments were made, capacities built, loans taken and people employed accordingly. These normalized assumptions have been wrecked, with a growth rate almost becoming half.
However, the government spends grew about 15 per cent, contributing to the GDP otherwise the number would have looked much lower. With this decline, India has now lost the tag of World’s fastest-growing economy to China which grew at 6 per cent.
Eight key infrastructure sectors, including cement, electricity, crude oil, steel, and coal also witnessed a steep decline. They have pointed that a slower recovery even in the upcoming quarter of October-December 2019-20.
The nominal GDP growth rate was registered 8 per cent in the first quarter of 2019-20 (April- July) but it has dropped to 6.1 per cent in the second quarter.
Let’s look at some of the other reasons why the GDP has fell down to 4.5
The manufacturers and local dealers have been complaining about the scarcity in the demand for more than a year. Apart from demand, there are many factors like the banking crisis, GST rule, tight monetary and fiscal policy, empty pockets of farmers, global slowdown, structural shift of the country in terms of cash-driven economy to digitally-enabled economy, slips in economic rankings affecting the growth of the Indian economy.
Government’s move of relaxing the tax-slabs for corporate doesn’t seem to be working however, it is very early to say about the move. The goal of reaching 5 trillion dollars seems vague for the country.
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