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.
Comments
Hegde is correct. He did not say that bjp has come to power to change indian constitution. He actual said that bjp is in the power to respect constitution and respect all the religions. Media twisted his statement. Hegde is a silent person as like his Go matha. He never says anything bad to others. He loves every one and respects all religions. He did not provocate the mob in Sirsi and Kumta who damaged private and govt perperty worth crores of rupees. Actually he was there to stop any voilence. He is ready to sacrifice his life to maintain peace n the society. He tried very hard to stop people from burning police car and commiting murderous attack on police. He even tried his best to stop people from posting rumours in whstasp and media that one Hindu girl was raped by gang of about 10 muslims boys and they even tried to kill her. He even asked Honnavar people not to make Paresh Mesta death issue a big one as it was planned by insiders only. Mr. Hegde is a follower of Mahatma Gandhi and he respects Bapuji very much. He cries on death anniversary of Bapuji and hates the killer Godse. He never visits Godse Mandir built by sangh parivar. Hegde is eligible person for next PM or President of India. He should be awarded with all kinds of awards ie. Padma Chakra/Padma Bhusan/ Padma shri for his noble nature and respect to all the citizens. He will be remembered by our generations to come. He will be a hero. His face itself shows how decent and nice person he is. He is ready to get slapped on face by any one and will never take revenge. He is follower of Jesus and will ask anyone who slaps on his right side to slap on left side also. Really he is a great person. Media is trying to defame him. I think whatever media doing against him is political motivated and his enemies are tryig to bring bad name to him.
He ate back what he vomited just because of the pressure by Patriotic Indian nationals. It is in their contaminated dirty blood that these anti-national communal Manuvadi Aryan parivar neither recognize nor respect Indian Secularism, Indian Constitution and Indian Flag.
shame on you Mr. AK Hegde.....
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