Let us have a look into the reasons of slow growth and measures to arrest further slide.
What has happened
India's economy slipped by 5.8 percent in the fourth quarter ending March 2019. GDP growth in the previous quarter was recorded at 6.6 percent. In the fourth quarter of the last fiscal year (2017-18) GDP growth was reported at 8.1 percent. The numbers presented by the CSO underlines a cooling economy.
What is concerning? For the full fiscal 2018-19, the country recorded GDP growth of 6.8 percent - a low in five fiscal years. Last fiscal year, India's GDP growth rate was reported at 7.2 percent. To arrest this slowdown will be first challenge to new government.
As per the data, the economic activities which registered growth of over 7 percent on a YoY basis in 2018-19 were 'public administration, defence and other services', 'construction', 'financial, real estate and professional services', 'electricity, gas, water supply and other utility services'.
"The growth in the 'agriculture, forestry and fishing', 'mining and quarrying', 'manufacturing' and 'trade, hotels, transport, communication and services related to broadcasting' is estimated to be 2.9 per cent, 1.3 per cent, 6.9 per cent and 6.9 per cent, respectively," the CSO said. The growth in Manufacturing, Construction and financial real estate sector has been more compared to previous year. Whereas in other sectors growth is declined.
The scenario of agriculture sector too does not look very bright. Elaborating further on the CSO data, chief economist ICICI securities Prasanna says , Weak rural activity indicators have also been impeding growth recovery as captured in low rural wages, slowdown in credit to medium scale industries and nascent recovery in two-wheeler and commercial vehicle sales.
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