Former Finance Secretary Subhash Chandra Garg on November 29 shared his views on GDP growth rate slump to 4.5 percent.
Chief Economic Advisor KV Subramanian said that the fundamentals of the economy continue to remain strong and that the GDP growth rate is expected to pick from Q3.
Economists expect the full-year GDP growth to slow down to around 5 per cent.More news: Finally, grab a Nintendo Switch Lite at a discount for Cyber Monday
The RBI has cut key policy rates by 135 basis points since February this year while simultaneously paring its growth forecast for 2019-20 by 1.3 percentage points to 6.1 per cent.
"The demand slump in the automotive sector, weakness in construction sector and lower growth in electricity sector partly brought about by excess rainfall in September have clearly impacted the economic momentum in Q2", Suman Chowdhury, President - Ratings at Acuité Ratings and Research said. Even in the previous year of Congress government in 2013-14, the GDP growth rate was 6.39 per cent. Let the nation compare it with the BJP's decimation of economy emanating from the bankruptcy of economic vision", he said."Public investment is at an all-time low.
The central bank's decision to go for next round of rate cut could be in sync with the government's recent measures, including a reduction in the corporate tax and promotion of credit offtake to boost economic activity amid the ongoing slowdown. "ICRA expects GVA growth to decline to 4.9% in the second quarter of fiscal2020, compared to 4.5% in the first quarter of fiscal2020, mainly under the impetus of the sector, "said Aditi Nayar, chief economist of ICRA".More news: Mercedes parent company announces job cuts
The major factor in the GDP fall was manufacturing contracting by 1 per cent.
According to NSO data, the growth rate of agriculture sector in the July-September quarter of FY 2019-20 has been 2.1 percent. "Led by the service sector, we can see a revival in the next quarter". Whereas in the same period of a year ago, the sector achieved growth at the rate of 8.7 percent. Similarly, growth in trade, hotels, transport, communication and other services related to broadcasting has come down from 6.9 percent to 4.8 percent in the second quarter.
This is the slowest GDP growth rate in around six years.More news: Australia v Pakistan: David Warner, Marnus Labuschagne share record stand
Gross Fixed Capital Formation (GFCF), which is barometer of investment, at constant (2011-2012) prices, estimated at Rs 10.83 lakh crore in Q2 of 2019-20 as against Rs 11.16 lakh crore in Q2 of 2018-19. It was Rs 11.16 lakh crore in the same period past year. "Sector-specific measures and increased government spending could be the quickest way to boost growth in the near term". This is 30.1 percent of GDP which was 32.4 percent previous year. As far as the performance of the country's economy is concerned on a half-yearly basis, the GDP rate in the period April to September is 4.8 per cent. It was 7.5 percent a year ago. Having left much of the stimulus burden to the Reserve Bank of India early this year, Modi has recently taken bolder steps to reverse the decline, though the policy room for additional stimulus is narrowing.