According to data released by the government, the Gross Domestic Product (GDP) grew 5% in the first quarter of the Financial Year (FY) 2019-20, significantly lower than 8% recorded in the same quarter last year. It is the slowest growth in over six years since 2013.


It marked the fifth straight quarterly decline in growth the first time since June 1997 that such a prolonged slump has been recorded. The slowdown is because of a sharp deceleration in consumer demand and tepid investment. Consumption which was the bedrock of growth in the past few years, collapsed to an 18-quarter low of 3.1% from 10.6% in the March quarter of 2018-19.


Investments grew only 4%, up from 3.6% in the previous quarter. This slowdown in investment and consumer demand have further derailed manufacturing, which grew just 0.6%. A meagre 2% rise in farm sector added to the demand slowdown.


According to the Reserve Bank of india (RBI), the slowdown is cyclical, rather than structural, which would have required deeper reforms. The experts believe that policies such as demonetisation and Goods and Services Tax (GST) only worsened things for the informal sector which in turn gave a structural blow to aggregate demand in the economy.


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