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New Delhi, Feb 29: India’s economy expanded at its slowest pace in more than six years in the last three months of 2019, with analysts predicting further deceleration as the global Covid 19 coronavirus outbreak stifles growth in Asia’s third-largest economy.

The gross domestic product (GDP) data released yesterday showed government spending, private investment and exports slowing down, while there is a slight upturn in consumer spending and improvement in rural demand lent support.

The quarterly figure of 4.7% growth matched the consensus in a Reuters poll of analysts but was below a revised - and greatly increased - 5.1% rate for the previous quarter.

The central bank has warned that downside risks to global growth have increased as a result of the coronavirus epidemic, the full effects of which are still unfolding.

Prime minister Narendra Modi’s government has taken several steps to bolster economic growth, including a privatisation push and increased state spending, after cutting corporate tax rates last September.

In its annual budget presented this month, the government estimated that annual economic growth in the financial year to March 31 would be 5%, its lowest for last 11 years.

Modi’s government is targeting a slight recovery in growth to 6% for 2020/21, still far below the level needed to generate jobs for millions of young Indians entering the labour market each month.

The annual GDP figure for the September quarter was ramped up from an earlier estimate of 4.5%, while the April-June reading was similarly lifted to 5.6% from 5%, data released by the Ministry of Statistics showed on Friday.

Capital Investment Drop

In the December quarter, private investment grew 5.9%, up from 5.6% in the previous quarter, while government spending rose by 11.8%, against 13.2% in the previous three months.

However, corporate capital investment contracted by 5.2% after a 4.1% decline in the previous quarter, indicating that interest rate cuts by the central bank have failed to encourage new investment. Manufacturing, meanwhile, contracted by 0.2%.

“It appears growth slowdown is not just cyclical but more entrenched with consumption secularly joining the slowdown bandwagon even as the investment story continues to languish,” said Madhavi Arora of Edelweiss Securities in Mumbai.

Many economists said that the government stimulus could take four to six quarters of time before lifting the economy and the impact of those efforts could be outweighed by the global fallout from the coronavirus epidemic that began in China.

“The coronavirus remains the critical risk as India depends on China for both demand and supply of inputs,” said Abheek Barua, chief economist at HDFC Bank.

Indian shares sank on Friday for a sixth session running, capping their worst week in more than a decade. The NSE Nifty 50 index shed 7.3% over the week, while the Sensex dropped 6.8%, the worst weekly declines since the 2008-09 financial crisis.

Separately, India’s infrastructure output rose 2.2% year on year in January, data showed on Friday.

A spike in inflation to a more than 5-1/2 year high of 7.59% in January is expected to make the RBI hold off from further cuts to interest rates for now, while keeping its monetary stance accommodative.

Jan 29: Multiple organisations have called for a Bharat Bandh today in order to protest against the recently passed Citizenship Amendment Act and the proposed National Register of Citizens (NRC). The Bharat  Bandh today has been organised in Surat in Gujarat, Jharkhand and Andhra Pradesh. Increased security measures have been put in place in the three states keeping in view the call for shutdown.

According to media reports, the call for Bharat Bandh was given by Maulana Sajjad Nomani of the All India Muslim Personal Law Board (AIMPLB). This was to protest against the controversial CAA-NRC. This call is supported by an NGO based in Surat, Versatile Minorities Forum (VMF). Apart from the VMF, the call for strikes has been supported by organizations such as Bahujan Kranti Morcha, National Association of Street Vendors of India Surat chapter and the Textile Market Workers' Union.

The workers of the VMF were also spotted distributing pamphlets and urging people to support the strike. Several shopkeepers have also put up notices stating that their shops will be shut for the day.

Earlier, Bharat Bandh was called by 10 trade unions and several bank employees in order to protest against the "anti-people policies of the government" on January 8 and 9. A few violent incidents during this Bharat Bandh were reported in West Bengal.