India's economic growth slows to 4.5% in July-Sept

India's economic growth slows to 4.5% in July-Sept

India's economic growth slipped further to hit an over-six-year low of 4.5 percent in the July-September quarter, according to official data released on Friday.

In the current GDP series, the lowest growth rate recorded was 4.3 percent in the fourth quarter of FY13.

The Gross Domestic Product continued its downward spiral for the seventh consecutive quarter, falling to 4.5 per cent in the second quarter (July-September) of the year 2019-20. The manufacturing sector shrank 1% last quarter, compared to 6.9% growth during the same period a year ago.

In the September quarter, private investment grew 5%, up from 3.1% in the previous quarter, while government spending rose 15.6% from 8.8%.

The country's second quarter GDP growth rate- which is the country's traditional festivals season-came at a dismal 4.5%.

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The nominal GDP growth rate, which accounts for inflation, slowed further from the first quarter to 6.1 per cent in July-September from double-digit level of 12 per cent in the corresponding period past year. As India heads into its so-called demographic sweet spot over the coming decade, it badly needs healthy nominal GDP growth to sustain job and income creation. Over the past few months, a series of steps have been taken or announced-corporate tax rate cuts, bank consolidation, unified labour codes, clearance of strategic sales of public sector undertakings.

The gross domestic product data released yesterday showed consumer demand, private investment and exports all struggling. The GDP growth is expected to pick up from Q3 of FY 2019-20.

Yet another global agency Moody's too had cut its growth forecast for the financial year in October to 5.8% from 6.2% earlier.

The weak growth outlook and interest-rate cuts are weighing on the rupee, the worst performing currency in emerging Asia this quarter. Second thing is nominal growth of GDP is 6.1 percent which can haunt India's dream to become 5 trillion dollar target in 2024-25. "There are early signs that services activity, consumer spending and credit growth picked up at the start of [the ongoing quarter]". Now the rate of expansion has slumped to just half that. The situation demands a coordinated fiscal priming in areas with higher multipliers and where spends could be immediately combined with a monetary policy push to address the effective transmission of rate cuts to NBFCs.

Making it clear that he was speaking as a citizen and an economist, keeping aside politics, the former prime minister quoted his teachers at Oxford and said economic growth and development are shaped by societies and one can not separate economy from the society.

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