India has lost the world fastest-growing economy spots. It grew slower than expected in the first three months of 2019. The official data showed from April 2018 to March 2019 the economy grow by 6.8 %. Meanwhile, in the quarter between January and March, the economy only grew by 5.8%. It is slower than 6.4% registered by China. India grows is also down 6.6% in the previous quarter.
It was the first set of a figure since Narendra Modi secures his second term. India became the world’s fastest-growing economy in his first term. However, the latest figures show the slowest growth rate in 17 quarters. It has fallen behind China.
Economist has been expecting India grow to be 6.3% in the first quarter.
Unlike China, India’s Economic growth has been driven by domestic consumption. That happened in the last 15 years. But, the latest data showed weaker consumer demand.
However, India finance secretary, Subhash Chandra is still optimistic. He is sure India will start a turnaround in the third quarter.
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Job Crisis
The Reserve Bank of India is expected to cut its interest rates from this month. Unemployment data was issued in the end of May. It has been delayed repeatedly. It showed a rate of 6.1% in the 2017/18 fiscal year.
According to a government report, unemployment touched a 45-year high between 2017 and 018. However, the latest rate shows that the job crisis is still there. There are not many new jobs have been created. There has not been detailed official data on unemployment. That has been for several years.
One of the pressing challenges for India current government is job creation.
Encouraging Market Demand
The newest GDP data shows that India is starring at an economic slowdown. Sales of cars and SUVs have slumped to a seven-year low. Tractor, motorbike, and scooter sales are down. Demand for bank credit has also sputtered.
Mr. Modi promised to cut income tax. However, India’s 3.4% budget deficit might hamper that option. Experts expect the widening fiscal deficit could hold back long term growth.
