As per data released by the National Statistical Office (NSO) Gross domestic product (GDP) grew at its slowest pace in over six years in the September quarter. GDP growth has declined from 5% in Q1 to 4.5% Q2.
India’s economy grew at 4.5% in the second quarter of FY20. In fact, the global economy is also facing a slowdown and this has affected India’s economy too. After the Lok Sabha election 2019, the BJP government has set a huge target of becoming $$5 trillion economy by 2024-25. But According to the latest data, the target seems to be incomplete. But with this slowdown country can never achieve $$5 trillion economy goal.
Just a year ago India’s GDP growth rate was 7%. In FY 2016-17, the GDP growth rate touched its highest peak at 8.2%. But unfortunately, the Government could not retain 8% growth rate. Now in the second quarter of FY20, the growth rate has declined to 4.5%. With this, India is no longer the fastest-growing economy in the world.
Due to the economic slowdown, several sectors have been affected:
- The Manufacturing sector contracted by 1% compared to growth of 0.6 percent in Q1.
- The financial services sector grew at 5.8 percent compared to 5.9 percent in Q1.
- The agriculture sector grew at 2.1 percent in Q2 compared to 2 percent in Q1.
- Mining grew at 0.1 percent in Q2 compared to 2.7 percent in Q1.
- Construction grew at 3.3 percent in Q2 compared to 5.7 percent in Q1.
Recession or slowdown?
Finance Minister Nirmala Sitharaman said even though economic growth may have slowed but there is no recession but Congress targeted BJP and said there is a recession in the country.
Former Prime Minister and senior Congress leader Dr. Manmohan Singh slammed the government on a declined GDP growth rate.
“The GDP figures released earlier today point the growth rate of our economy in the second quarter of the current fiscal year is as low as 4.5%. This is clearly unacceptable. And, the aspirations of our people want that this country should grow at 8% to 9% per annum. Therefore, the sharp decline in growth rate from 5% in the first quarter to 4.5% in second-quarter is indeed worrisome,” Singh said.
Needless to say that the GDP for the entire FY13 grew at 5% when Dr. Manmohan Singh was Prime Minister. And the growth rate for the second quarter of FY20 is the lowest since then.
As per Manmohan Singh, two of the government’s policies – Demonetisation and GST implementation – have led to the slowdown. While the former can not be fixed, Manmohan Singh advised the government to rationalize GST rates. As of now, the GST system has four slabs – 5%, 12%, 18%, and 28%. However, the government has taken several steps to revive the economy, including reducing corporate tax in September to boost investment.