During the last few months of Prime Minister Narendra Modi's previous tenure, the economy grew at its slowest pace in the last five years. In a stark reminder of the UPA-2 government's five per cent growth rate during their last two years, the GDP in the final quarter of 2018-19 fiscal grew by only 5.8 per cent, government data showed.
"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 per cent," the government said in a statement.
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The reading of the numbers meant that India no longer remained the fastest growing economy in the world with six per cent plus growth rate prevailing in the economy. Instead, China crept ahead of India as the fastest growing economy in the world with a GDP growth rate of 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.
The recent GDP numbers added to the government's woes on their first day of functioning. Even though finance minister Nirmala Sitharaman had officially not taken charge as minister for finance and corporate affairs, she rushed to North Block in the afternoon after the GDP numbers were communicated to her.
Sitharaman received a briefing from Subhash Chandra Garg, finance secretary, who is also holding additional charge as secretary of the department of economic affairs in the finance ministry. "The minister was concerned over the recent GDP numbers and wanted to understand the trends prevailing in the first quarter of the current year," said Garg, who briefed the new finance minister for over an hour on Friday.
"The lower GDP growth figures are attributed to weaker domestic consumption, slower global growth and tensions between the United States and China," an official statement from the ministry read.
The GDP growth rate has been constantly declining, starting 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.
The government estimates 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 its earlier estimate of 7.0 per cent in February. During the 2017-18 fiscal the Indian economy grew at a rate of 7.2 per cent.
So far all sectors, including manufacturing, construction, financial, real estate and professional services are experiencing a slowdown during the fiscal.
Agriculture, forestry and fishing sector has shown a marginal growth of 2.9 per cent compared to the previous year's growth rate of 5.0 per cent. Mining and quarrying sector growth rate declined to a seven-year low of 1.3 per cent as against the previous year's growth rate of 5.1 per cent in the sector.
Electricity, gas, water supply and other utility services are estimated to grow at 7 per cent as against the previous year's growth rate of 8.6 per cent. Trade, hotels, transport, communication and services related to the broadcasting sector is estimated at 6.9 per cent as against the previous year's growth rate of 7.8 per cent.
Public administration, defence and other services sector have all shown a decline in growth rate, at 8.6 per cent as against last year's growth rate of 11.9 per cent.
Manufacturing sector growth is estimated at 6.9 per cent as against the previous year's growth rate of 5.9 per cent. The GVA in 'construction sector' at basic prices for 2018-19 has increased to an estimated 8.7 per cent as against the previous year's growth rate of 5.6 per cent. The 'financial, real estate and professional services' sector has shown a higher growth rate of 7.4 per cent as against the previous year's growth rate of 6.2 per cent.
Meanwhile, fiscal deficit for the financial year 2018-19 came in at 3.39 per cent of GDP, marginally lower than 3.4 per cent, in keeping with the budget estimates. "We could contain the fiscal deficit to the budget prescribed limits, mainly due to an increase in non-tax revenue and lower expenditure," said Garg.
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, as a percentage of GDP, the deficit figure has come down marginally. This is mainly on account of GDP expansion in 2018-19," Garg explained.
Going ahead, the government expects consumer demand to pick up from the second quarter onwards. "Slow down in the fourth quarter (of 2018-19) GDP was due to temporary factors like stress in the NBFC sector affecting consumption finance. The first quarter of current fiscal (2019-20) would also witness relatively slow growth and from the second quarter onward it will pick up," Garg told reporters.
