The Economic Times

Is Indian economy looking at a new low?

Slowdown Vs Recession
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Slowdown Vs Recession

"Indian economy may be facing a slowdown but there’s no danger of a recession"--This is how Finance Minister Nirmala Sitharaman defended the government.

While GDP growth has been slipping for five consecutive quarters now, it's still a slowdown and not yet a recession. That's because a recession means a contraction in GDP for two consecutive quarters.

The GDP growth for the July-September quarter has slipped to 4.5%.

Let's have a look at the major indicators that fulled this.

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Retail Inflation
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Retail Inflation

Retail inflation inched closer to the Reserve Bank of India’s medium-term target of 4% in September for the first time in 14 months on higher food prices, although economists maintain that the economic slowdown will prompt a sixth consecutive interest rate cut in December.

In October it breached the Reserve Bank of India's (RBI) medium-term target of 4% for the first time since July 2018 due to higher food prices even though RBI had predicted that food prices "are likely to moderate as winter supplies enter the market".

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Shrinking output
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Shrinking output

India’s industrial production shrank for the second consecutive month in September, its worst performance in the series that began April 2012, highlighting the persistent structural slowdown in the economy and firming up expectations of further monetary easing next month with scant signs of a turnaround.

Agencies
The core issue
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The core issue

India’s core sector output contracted 5.8% in October, posting its worst performance in 14 years and suggesting that the economy may have slumped further in the second quarter of the current financial year.

Economists said the sharp contraction showed the severity of the industrial slowdown and a recovery may take time.

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Dear GST kitty
5/6

Dear GST kitty

In another indicator of economic slowdown, GST collection has dropped below Rs 1 lakh crore mark to Rs 91,916 crore for September. The September collection is believed to be the lowest in nineteen months.

The revenue during September, 2019 has declined by 2.67% in comparison to the revenue during September, 2018.

During April-September, 2019 vis-à-vis 2018, the domestic component has grown by 7.82% while the GST on imports has shown negative growth and the total collection has grown by 4.90%

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Finding jobs
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Finding jobs

The pace of employment growth in India slowed in the last two years with job creation growing 3.9% in 2017-18 and 2.8% in 2018-19, a study done by ratings agency CARE Ratings showed.

The ratings agency highlighted that core industries have witnessed “virtually negative growth in headcount”, with crude oil just about maintaining the employment level. These industries have been impacted by the slowdown in GDP growth as well as the challenges on the NPA side for banks.

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