New Delhi: India’s economy expanded at its slowest pace in over five years for the first quarter of fiscal year (FY) 2019-2020, according to official government data released on Friday evening.The gross domestic product (GDP) growth rose just 5% for the quarter ended June 2019, in a development that reinforces concerns over a slowing down of the Indian economy.Lower growth, data shows, is primarily due to a sharp deceleration in the manufacturing sector and sluggish agriculture output. In addition to this, ‘consumption growth’ was also weak – private final consumption expenditure growth fell to 3.1% in Q1 FY20 as compared to 7.2% in the previous quarter.The numbers that were released on Friday are below general market expectations: most estimates had predicted that Q1 growth would be between 5.7-5.8%Growth is down compared to the 5.8% recorded in Q4 FY19 and the 8% that the Indian economy hit one year ago in Q1 FY19.Financial QuarterGDP Growth Q1 2018-19 (April-June)8.0%Q2 2018-19 (July-Sep)7.0%Q3 2018-19 (Oct-Dec)6.6%Q4 2018-19 (Jan-March)5.8%Q1 2019-2020 (April – June)5.0%The last time that quarterly data was this low was in the Q1 of FY13, when GDP growth was recorded at 4.9%.“Q1 FY20 GDP growth at 5.0% was 25 quarter low. The growth slowdown was led by private final consumption expenditure, which grew 3.1% only (18 quarter low). Investment demand also remained lackluster and fixed capital formation grew 4.0% (4QFY19: 3.6%). Only government expenditure provided support to growth and increased 8.8%,” said Devendra Pant, chief economist, India Ratings and Research (Fitch Group), in a statement.“While general elections in April-May 2019 had some impact on investment growth, collapse of private consumption demand from 10.6% in 4QFY18 to 3.1% in 1QFY20 is real cause of concerns. Both structural and cyclical issues are plaguing Indian economy and in order to bring economy back to a respectable growth path both short-term and long term measures are required,” the statement added.
