TOPIC: INDIAN ECONOMY-PLANNING
GDP GROWTH FOR THIS YEAR AT 5%
Context: The Ministry of Statistics has said in a statement that the Gross domestic product is estimated to grow 5.0 per cent in 2019/20, slower than the 6.8 per cent growth of 2018/19.
This is the slowest pace in 11 years.
STATE OF INDIAN ECONOMY
- Annual economic growth slowed to 4.5 per cent in the July-September quarter, the weakest pace since 2013, blamed on weakening demand and private investment, putting pressure on the Government to speed up reforms as five rate cuts have failed to help.
- Indian growth had slowed to 3.1 per cent in 2008/09 after the global financial crisis.
- The unemployment rate rose to 7.7 percent in December from 7 percent a year earlier, data released by the Centre for Monitoring Indian Economy, a Mumbai-based think tank, showed.
CAUSES FOR THE DECLINE
- The decline has been mainly on account of deceleration in manufacturing sector growth, which is expected to come down to 2 percent in 2019-20 from 6.2 percent in the year-ago fiscal
- The deceleration was also witnessed in sectors like agriculture, construction and electricity, gas and water supply, as per the first advanced estimates of the national income released by National Statistical Office (NSO)
- Data so far this year points to a weaker-than-expected activity, with global trade tensions and rising crude oil prices posing risks
- The government is expected to announce tax concessions for individuals and increase spending on infrastructure after cutting corporate tax rates last year.
- Finance Minister Nirmala Sitharaman had last week unveiled a plan to invest Rs 102 lakh crore in infrastructure over the next five years in a bid to make India a $5 trillion economy by 2025
- The slowdown in economic growth implies the government will have to come up with a fiscal stimulus in the budget.