With GDP growth falling consecutively for the fifth time, India has slipped to fourth position globally in terms of real growth rates, a report said. The Indian economy is now behind China, the Philippines and Indonesia as it recorded 5 per cent growth in the first quarter of FY20, the slowest in last 25 quarters. The growth in Q1 of the ongoing fiscal contradicted all expectations and part of the slowdown looks structural, report on economy released by Anand Rathi said. Q1 FY20 growth belied all expectations. With five successive decelerations, part of the slowdown looks structural, it noted. “The GDPand GVA decelerations are nearly across the board. Private consumption and manufacturing decelerations are particularly noticeable, while investment growth continues to be low and services failed to maintain buoyancy,” it added.
Printing 6.5 per cent growth in the fiscal seems challenging, even on the assumption of a robust recovery in the second half of the year, the report said. There is a need for strong policy intervention so as to tide over the slowdown, the report by Anand Rathi noted. “Such expectations are likely to impact equities positively and bonds negatively,” it also said.
“Contrary to the usual trend, net exports contributed positively to GDP growth (positive net change in net exports as imports grew slower than exports) and the unallocated part of GDP (discrepancies) was also relatively large,” the report added. The growth could have been even worse in the absence of these two factors, it also said.
Meanwhile, India had already lost the fastest growing major economy tag to China in the March quarter, when it grew at 5.8 per cent. China’s economy grew 6.2 per cent in the June quarter despite the ongoing trade war with the US. Indonesia grew at 5.05 per cent in the same period.
