Construction sector GVA growth too slowed to 5.7 per cent from 9.6 per cent earlier. "If this is not a wake up call for an economic emergency, recognising the fact that we have a economic decline, then what is?" she said, speaking at the Times Group event, minutes after the release of the economic data.
The economies of India and China have grown rapidly over the past couple of decades, but a worrisome combination of development challenges and global trade tensions pose a threat to their economic outlook.
The government had on August 23 announced a slew of measures to boost economy and lift investor sentiment.
The Budget for 2019-20, he said, has announced Rs 100 lakh crore investment in infrastructure creation in the next five years which has the ability to crowd in investment. "Right now, we are sticking to the forecast of achieving 7 per cent growth in FY20 (April 2019 to March 2020)", Subramanian said. He added that the government was committed to reviving the economy, and claimed that the country would "very soon" be on a high-growth path.
The rating agency believed that there is no quick-fix solution to the downturn which has been in the making for the past few years. This would create the second largest lender, after the State Bank of India. Private consumption expenditure further decelerated to an 18-quarter low of 3.1% in the June quarter, while investment demand picked up slightly at 4% from 3.6% in the preceding three months. Gross fixed capital formation stood at Rs 11.66 lakh crore and accounted for 32.5 per cent. He assured that the government was taking steps to improve the situation.
Analysts say that weak consumer demand and private investments are reasons behind the slowdown in the economy. "There are both structural and cyclical issues are plaguing the Indian economy".
The GDP growth forecast for 2019 calendar year was revised downwards from its previous estimation of 6.8 percent. Last year, manufacturing sector had put up a stellar show raking in 12.1 per cent growth. However, mining sector growth climbed to 2.7 per cent from 0.4 per cent a year ago.
Illustrating the impact of lower GDP growth, R. Nagraj, professor of economics at Indira Gandhi Institute of Development Research, said that given per capita monthly income of Rs 10,534 in 2018-19, an annual GDP growth of 5% means that the per capita income will go up by Rs 526 in FY20.
June quarter's pedestrian economic expansion is several shades lower than the healthy 8 per cent recorded just a year before in June 2018. The Reserve Bank of India earlier this month while cutting the repo rate by 35 basis points lowered real GDP or gross domestic product projection for the current year to 6.9 per cent, from 7 per cent.
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