The Indian economy is on the downswing. Almost all the observers – including the government, corporates and independent analysts – agree on this. The differences, however, are in characterisation of the slowdown in terms of the nature, sources, intensity of impact and the measures for revival.

The GDP growth rate in the first quarter of 2019-20 (April-June 2019) fell drastically to 5 per cent, the lowest in the last six years. This statistic made the news, forcing the central government to accept the problem grudgingly.

The Reserve Bank of India’s Annual Report 2018-19, released this September, acknowledges the decline in the pace of growth and identifies the causes behind it. The RBI observed that the annual average GDP growth rate, which was 7.7 per cent during 2014-18, increased to 8 per cent in April-June 2018, but from July 2018 shed the momentum, and the decline deepened “with a knock on manufacturing and net exports.”

It emphasised that the “bedrock” of growth was domestic demand and capital investment. Aggregate demand weakened because agricultural growth decelerated from September 2018; there was excess supply in agriculture with piled-up buffer stocks. International agricultural prices declined, adversely affecting exports. All these together depressed farmers’ income, pulling down rural demand.



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