India’s Central Statistics Office released the gross domestic product numbers for April-June quarter, which showed that India’s GDP expanded 5% in last quarter, the slowest pace in six and half years, down from 8% in Q1 of 2018-19 and slowing from a 5.8% in the January-March quarter. India’s GDP growth averaged 7.7% from 2014 to 2018. The economy began losing momentum after expanding 8% in the April-June quarter last year. The previous low GDP growth was 4.3% in the January-March quarter in 2013. Chief Economic Adviser Mr KV Subramanian attributed the slowdown in GDP growth to domestic and global factors. But experts say are surprised, shocked and worried to see India’s GDP drop to 5%, indicating that the economic slowdown is bigger than anticipated. A Reuters poll of economists had forecast annual growth of 5.7% for April-June. Former Chief Economic Adviser Mr Arvind Subramanian in a research paper “India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications” published at Harvard University in June 2019 said that India’s GDP growth is overestimated by 2.5%, echoing the 2.2% hike by changing calculation method in 2015, which puts Indian GDP in Q1 at 2.5%, abysmally low number for a developing economy but also explaining the unprecedented current slowdown in all walks of life in India
Gross value added, which is GDP minus taxes, and therefore a more realistic proxy to measure economic activity, grew 4.9% in April-June 2019, compared to 7.7% in the April-June 2018-19 and 5.7% in January-March 2018-19.
GVA
| Sector | Q1’2018-19 | Q1’2019-20 | YoY |
| Agriculture, Forestry and Fishing | 5.1% | 2.0% | -61% |
| Mining and Quarrying | 0.4% | 2.7% | 575% |
| Manufacturing | 12.1% | 0.6% | -95% |
| Electricity, Gas, Water Supply and Other Utility Services | 6.7% | 8.6% | 28% |
| Construction | 9.6% | 5.7% | -41% |
| Trade, Hotels, Transport, Communication and Services | 7.8% | 7.1% | -9% |
| Financial, Real Estate and Professional Services g | 6.5% | 5.9% | -9% |
According to Goldman Sachs, as of June 2019, the current slowdown has lasted for 18 months, making it is the longest since 2006. It said “More than half of the decline in economic activity has been driven by a consumption slowdown, which appears to be broad-based, with components other than auto contributing more than twice the effect of autos to the total consumption decline.”
Source of information