India’s Gross Domestic Product Is Highly In Concern: Growth Falls To 4.5% in Q2 of 2019-20

latest Gross Domestic Product

India is highly worried for its very low economy in this quarter (Q2 2019-20). There is continuous fall of the Gross Domestic Product, which is in line for the seventh consecutive quarter, and now it has made a fall to 4.5 per cent in the second quarter (July-September) of the year 2019-20, which is very low. This is a fall of 0.5 per cent points compared to the last quarter. When compared to the second quarter of the year 2018-19, it is a fall of 2.6 per cent points. In the second quarter of the year 2018, the GDP growth stood at 7.1 per cent.

The GDP growth which is seen in the last quarter was the lowest in the six years. The previous lowest rate was recorded at 4.3 per cent in the final quarter (January-March) of 2012-13.

India’s Gross Domestic Product Is Highly In Concern


The GDP measures the production regardless of the various uses to which the product can be put. The equation stands for calculating GDP is: GDP = private consumption + gross investment + government investment + government spending + (exports – imports). The GDP data was released along with the data for the eight core infrastructure industries, which showed output declining by 5.8 per cent in October. Out of these 8 industries, six industries saw a decline in output in October 2019. Coal was the worst hit, which showed a steep decline by 17.6 per cent.

The GDP growth rate for the first quarter of 2019-20 was at 5 per cent, it was quite low. The decline in growth rate has made India worried of its economy and also has taken away the tag of world’s fastest growing major economy to China. GDP rates in the Q4 2018-19 and Q1 2019-20 were slower than that of China, which is a much bigger economy than India.

Low GDP in India is due to many factors, slowdown in private consumption, investment and export, but the key indicator is lack of credit (money to produce goods) growth and demand in the market. Narendra Modi government has taken a swing of transformation in recent months to boost credit in the market – focusing on offering incentives to banks to increase lending – but still these things will take time to improve.

Certain measures are included like -five times slashing of the lending rate (the rate that is linked to banks’ interest rates) by the Reserve Bank of India this year, withdrawal of ‘super-rich surcharge’ imposed on foreign investors, exemption of start-ups from ‘angel tax’, an infusion of Rs 70,000 crore in public sector banks and a significant cut in the corporate tax rate.

But on discussion, the analysts and experts portrayed that the government did not take enough steps on the issue of slowdown in demand. They claimed that decline in demand is the prime reasons among all the factors for economic slow growth rate.

But India is worried, when Modi Government has promised for $5 Trillion economy by 2025, then how this would be possible with such present growth.

India’s Gross Domestic Product Is Highly In Concern

This concern expressed by economists goes with what Union Finance Minister Nirmala Sitharaman said earlier this month. She has said that some time is required to bring everything on the right track as the government is taking out the best possible ways for its strengthening.

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