India has recorded its slowest economic growth in six years in the June quarter of 2019/20.
Government figures released on Friday showed India’s economy grew by only five per cent from April to June 2019, a worrying scenario for a country that has regularly featured as the fastest growing economy with above seven per cent growth recorded in recent years.
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. It one of the most common indicators used to track the health of a nation’s economy.
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On Friday, India’s economy at 5 per cent recorded the slowest economic growth in six years driven by a steep fall in consumption.
India’s consumption was recorded at an 18-quarter low of 3.1% from 10.6% in the March quarter.
Investments grew 4%, up from 3.6% in the previous quarter while manufacturing grew just 0.6% and the farming sector saw a meagre rise of 2%.
Recent reports have indicated trouble brewing in India’s economy with the country’s automobile sector, often seen as the indicator of how well the market is doing, seeing a huge decline in sales in recent months.
“Government is taking steps. We should be back to the high growth path soon,” chief economic adviser Krishnamurthy Subramanian told reporters at the release of the report.
India’s Finance Minister Nirmala Sitharaman on the same day announced a landmark move to consolidate India’s several public sector banks, merging government-owned banks to reduce their number from 27 to 12, to create fewer but stronger lenders.
Nirmala Sitharaman takes the oath during the swearing-in ceremony of new ministers at the Presidential Palace in New Delhi Source: Prakash Singh/Pool Photo via AP
"More capital is being given to banks and they will continue to do more of what they were doing earlier," she said.
On the economic slowdown, Ms Sitharaman said the government was responding to the situation sector-wise.
"Every sector of the Indian economy, when it approaches us, we hear them out for solutions that they want and we respond to it. Suggestions (from them) and what would they want and what they expect from the government of India and I respond totem. I have already done (it) twice and I will do so more number of times. Every industry which has approached me I will respond", she said.
"I can only say we are responding to the industry requirements. Across the board there is no one particular answer that I can give, saying this is the magic wand. Sectorally, what they want, we are responding," she said.
India’s Prime Minister Narendra Modi, recently while addressing the nation on the occasion of India’s 73rd Independence Day expressed confidence that India will be a $5 trillion economy by 2024.
While a slew of measures have been announced and the ruling government looks optimistic, it is unclear how soon will India be back as the fastest growing economy in the world.
