In a yet another indicator of India’s ongoing economic slowdown, the country’s official data has shown that gross domestic product fell to a six-year low for the April-June period.
According to Central Statistics Office, GDP in Asia’s third-largest economy grew by just 5%, the lowest since the Narendra Modi government came to power in 2014.
That compares with growth of 8% in the same period last year. It was also a drop from growth of 5.8% in the preceding quarter.
Nominal GDP growth, a measure of GDP without adjusting for inflation, rose just 8%, the least in national accounts going back to the 2012 fiscal year, indicating a deep slowdown.
Various indicators such as sales of passenger and commercial vehicles; production of capital goods, consumer durables, steel and cement; use of air travel, among others, contracted or grew more slowly in the second quarter of the 2019 calendar year.
One of the worst affected sectors was manufacturing, which grew just 0.6% over the same quarter a year ago. This sector has seen protracted low growth since the 2018 fiscal year.
Agriculture, construction hit
Agriculture and construction, sectors which provide millions of jobs to farm and industrial workers in the unorganized sector, registered poor growth. Agriculture grew by 2% compared to 5.1% last year, while construction grew 5.7%, compared with 9.6% last year.
However, India’s Chief Economic Adviser Krishnamurthy Subramanian attributed the current slump to the global economic downturn and said the government was taking steps to revive growth.
Over the past week, the government announced a slew of measures including easing of foreign direct investment norms for some sectors and a rollback of tax surcharge on foreign portfolio investors.
But market experts expect the slowdown to continue for a while and that it will lead to another interest rate cut in October. The central bank has so far cut 110 percentage points this year.