India GDP growth rate slips down to 5% from 5.8% in Apr-Jul quarter

India Q1 GDP Growth Data HIGHLIGHTS:The Central Statistics Office (CSO) released India’s economic growth figures for the April-June quarter of FY20 on  Friday. The growth slowed down to 5 per cent in the fiurst quarter of the ongoing fiscal.In the last quarter of fiscal year 2019, the economy grew at 5.8 per cent. The decelaration in private consumption largely contibuted to such a substantial fall in the GDP number. RBI had projected India’s GDP growth for FY20 at 6.9 per cent, in the range of 5.8-6.6 per cent for the first half and 7.3-7.5 per cent for the second half of FY20. The government has already announced a slew of measures last week to boost demand in the economy.

Some of the factors behind the slowdown are an uncertain world economy due to the US-China trade war and Brexit concerns, a substantial drop in consumption in the domestic market, particularly rural areas, and a decline in purchasing power.

The economic situation has got complicated in the view of banks refusing to lower lending rates and adopting a circumspect approach in extending credit to industry.

GOVT STEPS IN

Recently, Finance Minister Nirmala Sitharaman announced that banks have agreed to pass on the full benefits of the RBI's rate cuts to consumers.

This move -- aimed at increasing purchasing power and thus, boosting demand -- was among a series of announcements Sitharaman made to address the slowdown in the economy.

The other announcements included the withdrawal of a 'super-rich surchage' imposed on foreign investors, exemption of start-ups from 'angel tax', an infusion of Rs 70,000 crore in public sector banks, and a raft of measures to help the ailing auto sector.