The country's Gross Domestic Product grew at the slowest pace in over six years at 5% during April-June quarter of 2019-20. The decline in the growth rate from 5.8% in the previous quarter was mainly due to deceleration in manufacturing output and subdued agriculture output. The economic growth stood at 8% in the same quarter of 2018-19.
The GDP at constant (2011-12) prices in Q1 of 2019-20 is estimated at Rs 35.85 lakh crore, as against Rs 34.14 lakh crore in the first quarter of this financial year, showing a growth rate of 5%, according to the data released by Central Statistics Office on Friday.
The manufacturing sector grew at 0.6% as compared to growth of 12.1% in the first quarter of 2018-19. Similarly, farm sector Gross Value Added (GVA) growth remained subdued at 2% as compared to 5.1% in the corresponding period of the previous fiscal. Construction sector growth too slowed to 5.7% from 9.6% earlier.
The mining sector, however, put up a better show by climbing to 2.7% from 0.4% a year ago.
The previous low in GDP growth was recorded at 4.3% in January-March quarter of 2012-13.
US-China fight
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| The trade conflict between the US and China is among various factors that pulled down the pace of growth, said Chief Economic Advisor K Subramanian. He said that electricity and power generation has witnessed an upward trend |
Commenting on the GDP data, Chief Economic Advisor K V Subramanian said, "Slowdown in growth is due to endogenous and exogenous factors," adding that the government was taking various measures to boost growth.
"The growth slowdown was led by private final consumption expenditure, which grew 3.1% only. Investment demand also remained lacklustre and fixed capital formation grew at 4%. Only government expenditure provided support to growth and increased at 8.8%," said Devendra Kumar Pant, chief economist, India Ratings and Research.
"The pace of expansion of GDP and GVA in Q1 FY2020 was resoundingly lower than forecast, driven by a collapse in manufacturing GVA growth," said Aditi Nayar, principal economist at ICRA.
The contraction in volumes in the auto sector, the YoY decline in the value of merchandise exports, as well as a slowdown in growth in other consumer sectors seem to have underpinned the marginal rise in manufacturing GVA growth in Q1 FY2020, negating the benefits arising from low commodity prices.
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