Automobile sales contracted 6.7 per cent in 2012-13 versus a 2.2 per cent growth in the previous year, showing lower discretionary spending
New Delhi: There seems to be no end to the bad news for India’s slowing economy. On Friday Data shows the economy had its weakest performance last quarter in more than six years, with the growth rate dropping below the symbolically important 5% mark. It’s a culmination of several months of down figures, from plunging car sales to shrinking factory output and an export slump.
This year has left much of the stimulus burden to the central bank early, Modi is now taking bolder steps to reverse the decline. In recent months, the government has slashed corporate taxes, set up a special real-estate fund, merged banks and announced the biggest privatization drive in more than a decade. While authorities are committed to doing more, the policy room may be narrowing.
Consumer spending, which forms the bedrock of the Indian economy, has taken a beating. India’s GDP grew at a modest 4.5% in the September quarter, official data released 29 November showed. This marks the sixth straight fall in quarterly GDP growth and also the first time in almost seven years that it has fallen below the psychologically important 5% mark
Some of the agencies have already warned it. The SBI predicted that the GDP growth rate for the June-September quarter would at 4.2 per cent, Nomura also put it at 4.2 per cent, Fitch at 4.7 per cent the same as ICRA and NCAER (National Council for Applied Economic Research) at 4.9 per cent. GDP growth numbers for the June-September quarter will be out later. The gloomy figures are only the latest in a series of bad news around the Indian economy.
Automobile sales contracted 6.7 per cent in 2012-13 versus a 2.2 per cent growth in the last year, showing lower discretionary spending. The present situation is almost like the same image of six years ago. Passenger car, commercial vehicle and two-wheeler sales continue to languish and decline for nearly a year now.
Several economists have predicted the GPD growth rate for the July-September quarter to be at 4.5 per cent. At the sub-five per cent GDP growth rate, India will be recording the lowest growth rate since March 2013 — an economic situation that had helped build political momentum against the Manmohan Singh government and in favour of Narendra Modi-led BJP government.
Low-interest rates also stoke inflation. Consumer price index-based retail inflation increase high of 4.62% in October, following an extended monsoon that damaged in many parts of India. This drove up the prices of onion and tomatoes. The central bank’s target is to keep retail inflation under 4%. This may shift the onus on stimulus completely to the Narendra Modi government.
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