Finance Ministry gives 1st response on 4.5% Q2 GDP growth; finds solace in IMF projection

After India's economic growth figure tanked to a 6-year-low of 4.5%, the Department of Economic Affairs (DEA) Secretary Atanu Chakraborty said that despite the slow growth rate, the economy's fundamentals remain strong. The DEA is the principal body of the Union Finance Ministry. The Secretary also expressed confidence in the GDP growth rate picking up in the October-December quarter (Q3).

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Slowdown deepens

In a big blow to India's economy, India's second-quarter GDP (July-September) numbers stand at 4.5% – the slowest growth in almost six years, as released by Central Statistics Office on Friday. The previous quarter (April-June) GDP numbers were at 5% and the Q2 (2018-2019) stood at 7%. This development comes inspite of the government's various economic moves like the merger of nine state-run banks into four, major corporate tax cuts, policy changes in the automobile sector, reduction in tax regulations to boost foreign income, attract investors and steps to increase consumer demand. The government currently follows the base year of 2011-12.

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Slowing growth in economy

The official numbers released by the government showed that eight core industries' output in October declined by 5.8%. The Gross Value Added (GVA i.e GDP without taxes) grew 4.3% in July-September 2019 compared to Q1 when the growth was 4.9%. The recent slump in growth reflects the slow growth in the economy due to the slump in manufacturing, automobile industry, retail, agriculture. Meanwhile, in September inspite of the many economic boosts, the farm sector grew 2.1% in the second quarter of 2019-20, due to the delayed arrival of monsoon. Moreover, following a declining trend, the manufacturing sector grew by 1% indicating stagnant demand for goods. Apart from this, the Society of Indian Automobile Manufacturers (SIAM) data stated that sale of vehicles declined 23.7% during July-September. 

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