Crisil cut GDP growth to 6.3% in fiscal 2020
04 September 2019
Feeble first quarter GDP growth is expected to stunt full year GDP. Fiscal 2020’s first quarter gross domestic product (GDP) growth estimate at 5 per cent — the slowest in 25 quarters — corroborates that India’s economic slowdown is deeper and more broad-based than suspected.
While on-ground indicators did suggest that the quarter would look worse than the previous one (at 5.8 per cent), the extent of the fall has caught everyone by surprise.
A plunge in domestic private consumption demand, slump in manufacturing, halving of merchandise exports growth, and a high-base effect from last year have gnawed away at first-quarter growth.
Private consumption growth – the bulwark of India’s growth story in recent years – registered a scant 3.1 per cent in the first quarter, a four-year low. The last couple of times private consumption fell this sharply was in the first quarter of fiscal 2013 (-0.9 per cent) and third quarter of fiscal 2015 (2.1 per cent), as per the new GDP series.
With over 55 per cent weight in GDP and 7.6 per cent annual growth, on average, in the past five years, the importance of bolstering private consumption cannot be over-emphasised. In the past few years, households had dipped into their savings and leveraged themselves to support private consumption. However, first quarter data shows, they have not been able to sustain the momentum.