India’s economic growth sputters to 4.5%, weakest in more than six years

India’s second quarter GDP growth slowed sharply to 4.5 per cent, the weakest pace in more than six years, as manufacturing output hit a slump and consumer demand as well as private investment weakened.The Gross Domestic Product (GDP) expansion rate moderated from 5 per cent recorded in April-June 2019 and is much weaker than the 7 per cent growth registered in July-September 2018, according to official data released Friday.The major factor in the GDP fall was manufacturing contracting by 1 per cent. A separate data showed core infrastructure industries’ output declining 5.8 per cent in October, the biggest contraction since at least 2005.The GDP growth rate in the second quarter of the current fiscal year (April to March) is the slowest since January-March 2013 and marks six consecutive quarters of slowing growth — a first since 2012.
This despite the Narendra Modi-led government taking several steps — including slashing corporate taxes, setting up a special real-estate fund, merging banks and announcing the biggest privatization drive ever — to revive investment climate and bolster economic growth.Also, the Reserve Bank of India (RBI) has cut interest rates five times so far in 2019, by a total of 135 basis points, to boost liquidity in the financial system amid concerns that growth momentum is slowing down. There is an expectation that the central bank may slash interest rate again at its monetary policy meeting next week.Some surveys show business confidence is at multi-year lows.For the first half of FY 2019-2020, the GDP growth slowed to 4.8 per cent, against 7.5 per cent recorded in the first half of 2018-19.
Speaking at a seminar, Former prime minister Manmohan Singh said the GDP growth rate of 4.5 per cent was unacceptable and worrisome.“Aspiration of our country is to grow at 8-9 per cent. The sharp decline of GDP from 5 per cent in Q1 to 4.5 per cent in Q2 is worrisome. Mere changes in economic policies will not help revive the economy,” he said.