BCN-08, 09 India quarterly growth falls to worst level in six years

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INDIA-ECONOMY-GROWTH-UPDATE

India quarterly growth falls to worst level in six years

MUMBAI, Nov 30, 2019 (BSS/AFP) – India’s economy grew at its slowest pace
in more than six years in the July-September period, down to 4.5 percent from
7.0 percent a year ago, according to government figures released Friday that
piled more pressure on Prime Minister Narendra Modi.

The expansion in Asia’s third-largest economy fell from 5.0 percent in
April-June and marked the sixth consecutive quarterly contraction.

The GDP growth, now well below the level needed for India to provide the
millions of jobs required each year for new entrants to the labour market,
poses a major headache for Modi.

His government is struggling to kickstart what was once the world’s
fastest growing major economy as consumer demand shrinks and unemployment
surges to a four-decade high.

Finance minister Nirmala Sitharaman has announced several reforms, easing
restrictions on foreign investment in key sectors, slashing corporate taxes,
and launching a privatisation drive aimed at reviving moribund state firms.

The central bank, the Reserve Bank of India, has cut interest rates five
consecutive times this year in a bid to boost lending.

But none of the measures have raised consumer confidence. Demand for
everything from cars to cookies has plummeted.

The slump has already seen India lose its position as the fastest-growing
major economy to China this year.

China said last month that its economy grew 6.0 percent in July-September,
down from 6.2 percent in the second quarter.

Economists expect India’s central bank to announce yet another rate cut on
Thursday to combat a liquidity crunch caused by the collapse of India’s
shadow banking sector. Rates are currently at a nine-year low.

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INDIA-ECONOMY-GROWTH-UPDATE 2 LAST MUMBAI

– Patchy record –

Economist and author Vivek Kaul told AFP that the reforms were a case of
too little, too late.

“The Modi government waited for growth to collapse” before taking any
action, Kaul said.

“The steps are essentially very marginal and not going to help the economy
in the long run,” he said, adding that more far-reaching reforms were needed
but were unlikely to happen.

Modi’s right-wing government won a landslide re-election victory in May
but its economic record has been patchy.

Experts say the economy has never recovered from a 2016 shock cancellation
of bank notes that forced many small-scale businesses to shut down or the
roll-out of a nationwide goods and services tax in 2017.

The opposition Congress Party slammed what it called “failed Modi-nomics”
in its comment on the new data.

Mumbai-based economist Ashutosh Datar told AFP the latest figures were “a
reaffirmation of how serious and damaging the slowdown is”.

“The only message for the Modi government is that it should avoid any more
misadventures like demonetisation,” he said, warning, “the worst may not be
over yet.”

Earlier this month New Delhi shelved a controversial report citing “data
quality” issues after leaked figures showed that per capita spending had
slumped for the first time in four decades.

The unpublished National Statistical Office data showed that rural
spending on essential items such as cereals plunged 20 percent between July
2017 and June 2018, the Business Standard newspaper reported.

In a note released before the GDP figures were announced, India Ratings
and Research (Ind-Ra) agency said it expected annual growth to come in at 5.6
percent, lower than the 5.8 percent estimated by Moody’s and the 6.1 percent
projected by the central bank.

“Even the festive demand has failed to revive (the economy) and this is
reflected in the current data”, Ind-Ra said in a statement.

Analysts say India’s economy needs to grow at 8 percent to create jobs for
the 1.2 million Indians entering the labour market each month.

BSS/AFP/HR/0930