The government, on Tuesday, has announced a forecast of India’s GDP which underlines a 5% growth for the current financial year, the slowest pace in 11 years.
The current forecast increases pressure on FM Nirmala Sitharaman to opt for measures to revive demand and boost the investments in the annual budget next month.
The predicted India’s GDP growth rate has fallen by 1.8% from the growth rate in FY19 and will mark the slowest growth rate since 2009, the year of global crisis, when GDP grew at 3.1%. It is noteworthy that GDP grew 4.5% in the second quarter of FY20, data released by the government showed, marking the slowest expansion in 26 quarters.
According to official and economists, after cutting corporate tax rates last year, the government is likely to announce tax concessions for individuals and increase spending on infrastructure.
In a bid to make India a $5 trillion economy by 2024, FM last week revealed a plan to invest INR 102 lakh crore in infrastructure over the next five year
The annual economic growth in the July-September quarter grew at 4.5%, the weakest pace since 2013.
N.R. Bhanumurthy, economist at National Institute of Public Finance and Policy, a Delhi-based think-tank told the media, “The slowdown in economic growth implies the government will have to come up with a fiscal stimulus in the budget.”
Further, he adds, “The latest growth numbers would impact revenue estimates and government spending for the next financial year. Growth was likely to be around 6-6.5% in 2020/21, he said, following a steady a recovery.”
According to the Ministry of Statistics, the manufacturing is projected to grow at a rate of 2% in FY20 as compared to the 6.9% growth in FY19.
Further to it, the growth rate of the construction sector will see a decline of 5.5% and will steadily move at a rate of 3.2%, while the farm sector is likely to grow at 2.8% as compared to 2.9% in FY19.
A data released by Centre of Monitoring Indian Economy, a Mumbai-based think-tank, showed a rise in the rate of unemployment to 7.7% in December as compared to 7% in the last year.
However, the private economist with an optimistic approach hope for a steady pick-up for India’s GDP in the next fiscal year.
The Ministry of Statistics will release growth data for the October-December quarter on February 28, along with revised full-year growth estimates.