India’s GDP grew at 5.8% in the January-March 2019 quarter, dragging down the full year growth to a five-year low of 6.8%. The unemployment rate in the country rose to a 45-year high of 6.1% in 2017-18, as per official data released on the first day of the second term of the Modi government.
Addressing a press conference on Friday, Economic Affairs Secretary Subhash Chandra Garg said the slowdown, caused by temporary factors such as liquidity crunch, is likely to continue in the April-June 2019 quarter, with the demand picking up from the second quarter onwards.
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“Slowdown in the fourth quarter GDP was due to temporary factors, like stress in the NBFC sector affecting consumption finance. The first quarter of the current fiscal will also see relatively slower growth. From the second quarter onwards, we expect the growth and consumption to pick up,” Mr. Garg said.
Asked about India losing the fastest growing nation tag to China with a quarterly growth of 5.8%, Mr. Garg, who is also the Finance Secretary, said, “Quarterly numbers don’t matter…it is basically annual growth… At 6.8% annual growth, India is still the fastest growing nation… China is still lower.”
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During the year, the slowdown in the economy was led by sluggish growth in the agriculture, forestry and fishing sector (2.9% growth), the mining sector (1.3% growth) and manufacturing (6.9%).
The sectors which saw growth rate of over 7% were public administration, defence and other services, construction, financial, real estate and professional services, and electricity, gas, water supply and other utility services.
“The consumption story is not dead,” the secretary said, adding that, “I am confident that with interest rates becoming much more favourable and credit coming back in the system…the consumption story will be very good.”
The unemployment data, which was released a day after Prime Narendra Modi took oath for the second term, confirms an earlier leaked version of this survey that claimed that joblessness was at a 45-year high.
“It is a new design and a new matrix. It would be unfair to compare it with the past. This 45-year high is your interpretation. I don’t want to claim that it is 45-year low or high,” Statistics Secretary Pravin Srivastava told the media.
The data showed that 7.8% of the employable urban youth and 5.3% of employable rural youth was without jobs. Additionally, 6.2% male and 5.7% females across the country were jobless.
Further, as per the data, unemployment rate for males was higher in rural areas at 5.8% as against 3.8% for women, while in urban areas the rate for women was 10.8 against 7.1% for men.