Gross fixed capital formation, grew at 3.6% in Q4 compared to 10.6% in Q3 while private final consumption expenditure grew 7.2% in Q4 compared to 8.4% in Q3. | Photo Credit: Getty Images

New Delhi: India's economic growth slowed down in the three months ending March 31, 2019 amid lower public spending and consumption demand. According to data released by the Statistics Office on Friday, India's Gross Domestic Product (GDP) growth slowed to 5.8% in the January-March quarter of FY2018-19, lowest in 17 quarters, as against 6.6% in the December quarter.

With this reading India lost fastest-growing large economy tag to China for the first time in two-year. China's economy posted 6.4% growth in the March quarter.

Meanwhile, GDP growth for the previous financial year FY2018-19 stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%. In FY18, India's economy had grew at 7.7%. Economists polled by ET Now had estimated India's Q4GDP at 6.2% while FY19 GDP was seen at 6.9%. GDP growth figures for FY19 was even lower than the second advanced estimate released by the statistics office in February, which estimated FY19 economic growth at 7%.

In gross value added (GVA) terms, the economy grew at 5.7% in the January-March 2019 quarter, with full-year growth falling to 6.6%.

Many experts are of the view that the government may unveil some fiscal stimulus while keeping the fiscal deficit at controllable levels. Also, the Reserve Bank of India has ample room to slash interest rates as inflation remains subdued.

The apex bank’s monetary policy committee (MPC), which has cut policy rates by 50 basis points this year, is likely to cut the repo rate by a further 25 basis points at its June 4-6 meeting, bringing it to 5.75 per cent, the lowest since July 2010.

Farm sector was the biggest drag on economic growth in FY19 with 2.9% growth as against 5% in FY18. Gross fixed capital formation, grew at 3.6% in Q4 compared to 10.6% in Q3 while private final consumption expenditure grew 7.2% in Q4 compared to 8.4% in Q3, reflecting a slowdown in corporate capex and weak consumption demand.

Prime Minister Narendra Modi named Nirmala Sitaram as Finance Minister on Friday, giving her a critical task to arrest the economic slowdown. The flagging growth will put pressure on the government and the Reserve Bank of India to provide stimulus for the economy through fiscal measures and repo rate cuts respectively. However, pushing economic growth may be tough for the new government amid an ongoing slowdown in the global economy.

Many analysts believe the Centre should concentrate on options to raise funds for increased sectoral spending. At present, the options before the government are to go aggressive on PSU disinvestment and non-tax revenues like dividend from state-owned enterprises.