On Friday, the National Statistical Office (NSO) released the gross domestic product numbers for April-June quarter, according to which India’s GDP growth slipped to a 6-year low of 5 percent as compared to 5.8 percent in the previous quarter, caused by slump in manufacturing output, weak consumer demand and deceleration in private investment.
India’s GDP Growth Slumps To Over 6-yr Low of 5% in Apr-June
Meanwhile, China, which is a much larger economy than India, had recorded a GDP growth of 6.2 percent during the April-June period, slightly lower than the 6.4 percent record in the previous quarter. This is the second straight quarter when the quarterly GDP growth was lower than 6 percent. The subsequent decline in GDP growth has led India to further behind its neighbour in terms of economic growth.
However, India has already lost its title of the world’s fastest-growing economy to China in the previous quarter when its economic growth slowed to 5.8 percent compared to Beijing’s growth of 6.4 percent.
As per the World Bank’s latest GDP rankings, China and India are 2nd and 5th largest economies of the world, respectively, as of 2019. Among Asian countries, these two emerging economies together contribute more than half of Asia’s GDP.
The current economic slowdown is likely to spoil India’s hopes of becoming a $5 trillion economy in GDP terms by 2024.
The downfall has opened the doors for more interest rate cuts by the RBI in the coming days. The Reserve Bank of India has recently projected India’s GDP growth for 2019-20 at 6.9 percent.
The RBI annual report released on Thursday said that it was difficult to diagnose the reason or nature of India’s slowdown. As per the report, “The diagnosis is difficult, these conditions are hard to disentangle cleanly, at least in the formative state.”
Prior to the announcement of GDP numbers, Finance Minister Nirmala Sitharaman on Friday announced its second of the three-part stimulus, merging 10 public sector banks into four with a view to boost credit to help revive the economy.
