With economic growth rate of India slipping for six-straight quarters, it is possibly the longest slowdown in a span of 23 years. Similar situation was witnessed by the Indian economy just 3 times in the previous two decades and the ongoing financial year 2019-20 is set to become worst year for the Indian economy in a decade.
At the time the UPA government reigned, the average GDP rate ranged between 6.8%-7.7%. And during the first term of Narendra Modi led NDA government it stood at 7.3% i.e. between 2014-19.
In accordance with the IIP data released in November, the country's industrial output was at a 8-year low. IIP shrink by 4.3% in September this year over the previous year and manufacturing output also reported contraction by 3.9%.
Furthermore, GDP for the first two quarters of the FY 2019-20 came in at a disappointing 5% and 4.5%, respectively. The trend of slowing growth started with the last fiscal when India for the first quarter of FY19 reported GDP of 7.95%, 7% for Q2FY19, 6.58% for Q3FY19 and 5.83% for Q4FY19.
"India is in the middle of a severe credit contraction that started with the liquidity squeeze triggered by the crisis in the non-bank finance companies (NBFCs), which has now spread to deposit-taking companies as well. India is growing below historical trend and there will be some pressure on broad consumption aggregates. Modi's corporate tax cuts are bold but will take time to gain traction. India's recovery will be postponed to late 2020", Eric Fishwick, chief economist at CLSA said in an interview emphasizing that India's recovery shall at least take an year's time.