oppn parties Is The Economic Slowdown Intensifying?

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  • India's sovereign green bonds were oversubscribed four times as the RBI received 266 bids worth Rs 32892cr agaisnt the target of Rs 8000cr
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  • After the JNU administration tried to thwart the students from screening the BBC documentary on the Gujarat riots and PM Modi, now students of Presidency and Jadavpur universities in Kolkata have decided to screen it 5 times next week
  • While a US research frim Hindenburg says its analysis found the Adani group overleveraged and claimed that its bubble will burst very soon and that sent the price of group companies crashing (Adani companies lost a combined Rs 55000cr), Adani group said the report was 'baseless' and 'malicious'
  • This time Enforcement Directorate arrests TMC spokesperson Saket Gokhale under PMLA for money laundering
  • Padma awards announced on Republic Day: Mulayam Singh Yadav, architect Balkrishna Doshi and ORS pioneer Dilip Mahalanobis get Padma Bibhushan posthumously, Padma Bhushan ius awarded to Kumar Mangalam Birla and 8 others and 91 get Padma Shri
  • Stocks fall big time on Wednesday on F&O expiry, finalncial and banks take big hit: Sensex tumbles 773 points to 60205 and Nifty 226 points to 17892 even as the market volatility meter shoots up by 8.51%
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  • Suryakumar Yadav is named ICC Cricketer of the Year 2022 and Renuka Singh gets the ICC Emerging Cricketer of the Year 2022 award
  • BCCI gets a whopping Rs 4670cr in the auctions for the 5 teams in WIPL or as it will be known now, WPL. Adani Sportline gets Ahmedabad for Rs 1289cr while Mumbai Indians get Mumbai for 913cr
  • Calcutta HC overturns the hookah bar ban in Kolkata by saying that it is not an illegal trade
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Is The Economic Slowdown Intensifying?

By Sunil Garodia
First publised on 2019-03-05 16:18:57

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
The Indian economy is slowing down. Latest figures for the October-December quarter released by the Central Statistics Office confirm this. GDP has grown at only 6.6 percent in the third quarter this year, forcing a revision of the full year estimates to just 7%. This means that the last quarter growth will be just 6.5%, the lowest in 7 quarters. Full year gross value added (GVA) will only be at 6.85% which means that for three consecutive years, India will have a sub-7% GVA growth.

The drastic fall in agriculture and fisheries, from 4.2% in July-September to 2.7% in the third quarter is a cause for worry. Given the acute farm distress, falling rates show that the distress will intensify. This also means that rural incomes are falling and consumption will go down. Couple this with the reported shortfall in the sowing of the rabi crop and there is no doubt that farmers will continue to bear the brunt for a longer than expected time. Consumption spending data from the hinterland shows a drastic fall in demand.

Manufacturing is not rosy either. GVA in this sector has gone down to 6.7%. It was 6.9% in the second quarter and a robust 12.4% in the first. The Index of Industrial Production (IIP) shows the growth at 2.7% and it is drastically down from the 8.7% achieved in the same quarter last year. Only gross fixed capital formation (GFCF) expanded by 10.6% against the 10.2% logged in the second quarter. Fresh and big investments from the government are also not expected as it is in the last leg of its term and has already gone beyond its fiscal deficit targets.

These figures, when juxtaposed with the slowdown in China and Europe, the upcoming general election in the country and the worsening relations between India and Pakistan, do not raise hopes of an early economic recovery. With inflation in check, it is now upon the RBI to give a push to investment by making a bigger rate cut than the token 0.25 percentage points it made the last time. But one feels that in the absence of a huge rise in demand for goods and services, any rate cut will not cut much ice with investors. Since demand is not going to rise in a hurry, we are in for a period of consolidation. Things will probably improve from the second quarter next year with a new government in place and buoyancy for the September to November festival season.