Q3 GDP growth slows to 4.7% in December quarter; FY20 GDP growth seen at 5%

India's economic slowdown doesn't come to an end despite several steps were taken to contain it in the form of corporate tax cuts ad fund for real estate among others. India's gross domestic product (GDP) growth stood at 4.7 per cent in the October-December quarter of the financial year 2019-20 (FY20), according to government data that was released yesterday.

This is the lowest quarterly GDP growth recorder since 2012-13 when the new series began and it stood at 4.3 per cent in March quarter of the financial year 2012-13.

The National Income Data – second advance estimate for FY20 - released by the National Statistics Office (NSO) on Friday said the growth will be lower at 4.6 per cent or thereabouts in the fourth quarter of the fiscal, amid uncertainties over the extent of damage that the coronavirus pandemic could inflict on the global economy, which could have an impact on the supply and demand disruptions to Indian economy.

GDP grew by 5.1 per cent in the previous July-September quarter of the same fiscal while it stood at 5.6 per cent in the same quarter of the corresponding fiscal. During the nine months (April-December 2019) period, the Indian economy grew 5.1 per cent as against 6.3 per cent in the same period a year ago.

The GDP growth rate for the first quarter of 2019-20 was revised to 5.6 per cent from 5 per cent.

The National Statistical Office (NSO) has pegged economic growth at 5 per cent in 2019-20 in its second advance estimates released on Friday, the same as its estimates last month.

The decline in the economic growth has bottomed out, said Atanu Chakraborty, the economic affairs secretary, after the data was released.

Crisis Area

The crisis among shadow banks, global slowdown and weak rural spending has pushed down the Economic Growth in India. However, the government has taken several steps to reverse the slump like it has slashed the corporate tax rates, set up special real estate fund, withdrew higher taxes in foreign investors, merged state-run banks and also announced the biggest privatisation drive in more than a decade.

The Union Finance Minister Nirmala Sitharaman in the recent past said that the economy is not in trouble and green shoot are visible and the country is moving towards its target of being a $5 trillion economy. She added, the government is focusing on four engines of growth and they are a private investment, exports, private and public consumption. Later, while presenting the Union Budget 2020-21 in the Parliament on February 1, 2020, she estimated that India's nominal GDP will grow at 10 per cent for the financial year 2021.

In another set of data released, eight core industries recorded 2.2 per cent year-on-year growth in January. The core industries comprise more than 40 per cent of the weight of items included in the index of industrial production (IIP).

The economic affairs secretary Chakraborty said the growth in the core sector industries augurs well for the manufacturing sector during the January-March quarter. The cumulative growth of core industries during April 2019 to January 2020 stood at 0.6 per cent.