India's GDP growth, which hit a six-year low of 5 per cent in the first quarter of the financial year, has further dipped to 4.5 per cent, during the the much awaited government data revealed on Friday. India's economy had grown 7 per cent in the corresponding quater in the previous financial year.
The sharp drop in GDP growth rate is on expected lines as predicted by economists across the spectrum, who pegged the growth to be between 4.2 per cent and 4.7 per cent. The drop in GDP growth has been attributed to weak manufacturing and a drop in exports due to a global slowdown. This is the slowest expansion in about 26 quarters. The GDP recorded a growth rate of 4.3 per cent in January-March 2013.
In worsening signs of economic slowdown, the growth in core sector contracted further month-on-month, from 5.2 per cent to 5.8 per cent, in October.
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During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago. The Reserve Bank had lowered the GDP growth projection for 2019-20 to 6.1 per cent from earlier forecast of 6.9 per cent.
Meanwhile, the fiscal deficit has already crossed the full-year target, underlining the fiscal concerns for the government. The fiscal deficit for April-October stood at Rs 7.2 lakh crore versus Rs 6.48 lakh crore, reported The Economic Times. The budgeted target was Rs7.03 lakh crore.
The further dip in GDP growth comes even as Sitharaman attributed the current economic woes to the lagged effect of twin balance sheet crisis of stress on banks due to non-performing assets (NPAs) or bad loans on the one hand and heavily indebted corporates on the other, resulting from the UPA regime lending. Sitharaman's finance ministry had resorted to a slew of announcements in relief measures, including corporate tax rate cuts to lessen the impact on industries.
