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Resource centre on India's rural distress
 
 

Shock slowdown -R Suryamurthy

-The Telegraph

New Delhi: The Indian economy grew at its slowest pace in more than six years at 5 per cent in the first quarter of 2019-20, deepening worries about subdued factory output and resultant job losses.

It also fanned concerns about the Narendra Modi government’s ability to crank up demand amid clear indications that urban consumption had also started to slacken after rural demand went into a deep rut several quarters ago.

No one had expected the economy to slow down so sharply with economists polled ahead of the data release by the Central Statistics Office expecting it to dip to 5.7 per cent — just a little lower than the 5.8 per cent in the previous quarter.

“This is shocking; no one expected it to be so low,” said Biocon founder Kiran Mazumdar-Shaw. “If this is not a wake-up call signalling an economic emergency, then what is?”

This is the slowest growth since the 4.9 per cent growth recorded in April-June 2012-13. In the same quarter last year, the economy was humming along at a relatively pacy 8 per cent.

India’s bragging rights about being the fastest growing economy again went up in smoke. China reported a growth rate of 6.2 per cent in the April-June quarter of 2019, its weakest expansion in the past 27 years.

The real big worry is that growth in the manufacturing sector — which has a big bearing on employment — measured by gross value added shrank to 0.6 per cent in the first quarter from 12.1 per cent expansion a year ago, and 3.1 per cent in the previous quarter.

Growth in the farm sector was also subdued at 2 per cent compared with 5.1 per cent in the corresponding period of the previous fiscal.

Two other sectors that generate employment — construction and mining — also reported slower GVA growth at 5.7 per cent and 2.7 per cent. In the previous quarter, they had grown at 7.1 per cent and 4.2 per cent, respectively.

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