The current GDP numbers are the worst in the last five years. (Photo: Reuters/Representational image)

The Gross Domestic Product (GDP) growth for the first quarter of the financial year 2019-20 dropped to five per cent, a sharp decline of 0.8 per cent points compared to the last quarter that ended in March. The current GDP numbers are the worst in the last six years.

The GDP at Constant (2011-12) Prices in Q1 of 2019-20 is estimated at Rs 35.85 lakh crore, as against Rs 34.14 lakh crore in Q1 of 2018-19, showing a growth rate of 5.0 per cent, news agency ANI reported.

The financial year 2018-19 ended with an overall Gross Domestic Product (GDP) growth rate of 6.8 per cent, which was marginally lower compared to the year before. The growth rate for the fourth quarter of FY 2018-19 (January to March) stood at 5.8 per cent.

The new GDP growth numbers come at a time when the Indian economy is going through a downturn, which has particularly hit the auto, manufacturing and real estate sectors.

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.

Banks have not paid heed to the Reserve Bank of India's call for lowering interest rates. The RBI has reduced repo rate (the interest rate at which RBI lends money to banks and rate that is directly linked to commercial banks' lending rates) four times in row.

Over four policy meetings, the RBI has reduced repo rate by 110 basis points, an unusual move. Banks, which are facing a bad loans crisis and liquidity crunch, however, have cut their interest rates only marginally.

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.

This week, the government received a shot in the arm with the RBI deciding to transfer Rs 1.76 lakh crore from its surplus corpus to its coffers. This is likely to prop up public investment, which, many economists say, is the way out of the current economic gloom.

NOT ENOUGH?

While the government is announcing steps to address the concerns of the Indian economy, experts have said that measures taken so far are not enough.

They have called for deeper structural reforms for sustaining high GDP growth rate over the next few years. The recently announced measures, they say, are "short term" in nature and appear to be "quick-fix" solutions to deeper problems of the economy.

The government must focus, the experts say, on addressing joblessness, cleaning up the banking sector, overhauling the agricultural sector and increasing private investment to fix problems of the Indian economy.