GDP growth slides to 3.1 pc, core sectors' output shrinks

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Further within the industrial sector, the output of the mining and quarrying sector has improved 5.2% and the output of utilities sector gained 4.5% in the quarter ended March 2020.

India's economy grew 3.1 per cent in the January-March quarter of 2019-20 as against 5.7 per cent in the corresponding quarter of 2018-19, according to data released by the National Statistical Office (NSO).

Unlike some advanced economies, India's stimulus package has largely focused on subsidized credit to small businesses and farmers, while direct fiscal stimulus was limited to around 1% of the GDP, economists said.

The fall in the growth rate in 2019-20 would have been sharper, but for a rebound in agriculture and government expenditure.

The Reserve Bank had pegged the GDP growth for 2019-20 at 5 percent as projected by the NSO in its first and second advance estimates released earlier this year in January and February respectively. In 2019-20, gross capital formation at current prices, as a proportion of GDP, has fallen to 29.7 per cent of GDP. Compared to 2018-19, GFCF saw a contraction of 2.8%, highlighting the deeper problems underlying the slowdown.

Earlier government estimates had suggested that India's GDP would grow by 5% in 2019-20. Thus, the fourth quarter had to produce a growth rate of 5.4% to fulfil an annual growth rate of 5%. "Construction sector at -2.2 per cent clearly indicates high unemployment in the migrant labour segment pre COVID19", he added. However, slowing down of business activities across the world in January-March impacted the Indian economy.

The CGA also released fiscal deficit data for April 2020, and it showed a clear contraction in revenue collections compared to April 2019, due to the Covid-19 pandemic and the nationwide lockdown.

The provisional estimates of the government's revenues and expenditure during 2019-20 show that the total fiscal deficit is now estimated at Rs 9.37 trillion, compared with the revised estimate of Rs 7.67 trillion.

Saying that 3.1 per cent was the lowest GDP growth rate in the last 44 quarters, the Congress pointed to what it said were several areas of concern, particularly the manufacturing sector which has contracted by 1.4 per cent, indicating that demand has collapsed in the economy.



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