As of now, the Indian economy is hovering over an economic downturn situation and India's economy grew at its slowest pace in over six years. GDP grew 5% in the first quarter of FY20, marking the slowest growth since the fourth quarter of FY13. Nominal GDP growth, rose just 8% i.e, the least in the current series of national accounts going back to FY12, thus pointing towards a deep slowdown.
GDP trends
Consumption that has been the most positive aspect showing growth, collapsed to an 18 quarter low of 3.1% from 10.6% in the March quarter, whereas on the other hand investments grew 4%, up from 3.6% in the previous quarter. Just a 2% rise in the agricultural sector, added burden to the economy.
Also, the automobile sector, a barometer of the economy, has declined sharply in recent months leading to unemployment and production cuts.
To deal with the slowdown, the government has been taking certain steps such as liberalizing FDI for selected sectors, ensuring the flow of credit to non-banks, rollback of a controversial tax surcharge on foreign portfolio investors, more capital for banks and big bank consolidation.
But, as suggested by a few experts, there is a lot more that needs to be done to cope up with this and a few more interest rate cuts would be probably required. The government has started offering incentives on auto purchases to help revive demand. Apart from these, the weak global economy and trade tensions have kept growth muted.
Although there is a lot of improvement needed to be done, still the steps that the government has taken recently would help the economy to head towards the previous normal.
Consumption that has been the most positive aspect showing growth, collapsed to an 18 quarter low of 3.1% from 10.6% in the March quarter, whereas on the other hand investments grew 4%, up from 3.6% in the previous quarter. Just a 2% rise in the agricultural sector, added burden to the economy.
Also, the automobile sector, a barometer of the economy, has declined sharply in recent months leading to unemployment and production cuts.
To deal with the slowdown, the government has been taking certain steps such as liberalizing FDI for selected sectors, ensuring the flow of credit to non-banks, rollback of a controversial tax surcharge on foreign portfolio investors, more capital for banks and big bank consolidation.
But, as suggested by a few experts, there is a lot more that needs to be done to cope up with this and a few more interest rate cuts would be probably required. The government has started offering incentives on auto purchases to help revive demand. Apart from these, the weak global economy and trade tensions have kept growth muted.
Although there is a lot of improvement needed to be done, still the steps that the government has taken recently would help the economy to head towards the previous normal.
