New Delhi:
Even as Indian Prime Minister Narendra Modi on Friday surprised markets by naming Nirmala Sitharaman, formerly the defence minister, as the next finance minister on a day data showed that Asia’s third biggest economy grew at its slowest pace in the past five financial years.
While the economy grew at 5.8% in the January-March period, falling behind China’s pace for the first time in nearly two years, the unemployment rate rose to a multi-year high of 6.1% in the 2017/18 fiscal year.
"GDP at Constant (2011-12) Prices in Q4 of 2018-19 is estimated at Rs 37.20 lakh crore, as against Rs 35.15 lakh crore in Q4 of 2017-18, showing a growth rate of 5.8 percent," the government said in a statement.
This also means India is no longer the fastest growing major economy in the world. China is ahead at 6.4 per cent GDP in the March quarter. India's GDP estimate for the entire financial year 2018-19 was 6.8 per cent.
The lower GDP growth figures are attributed to weaker domestic consumption, slower global growth and tensions between the United States and China.
The figures highlight the challenges Sitharaman faces in her biggest government position, and raises the need for an urgent stimulus.
“The new government will first have to address the demand slowdown, which, in turn, requires revitalising the credit channels,” said Rupa Rege Nitsure, chief economist at L&T Financial Holdings in Mumbai.
The Indian economy reported continuous decline in GDP growth rate over the quarters as fiscal 2018-19 progressed, government data showed. The GDP growth rate has constantly declined from 8.0 per cent in the April-June quarter of FY19, to 7.0 per cent in the July-September quarter, and 6.6 per cent in the October-December quarter.
As per government data, the Indian economy is estimated to grow at a rate of 6.8 per cent during the financial year 2018-19 after a downward revision from government estimate of 7.0 per cent in February. The Indian economy had grown at 7.2 per cent in the previous financial year.
In industry analysis showed all sectors except manufacturing, construction, and financial, real estate and professional services to experience slowdown during the fiscal.
Agriculture, forestry and fishing sector has shown a growth rate of 2.9 percent as against previous year's growth rate of 5.0 per cent. The mining and quarrying sector on the other hand has shown a growth rate of 1.3 percent as against previous year's growth rate of 5.1 per cent.
Although in absolute terms the fiscal deficit has gone up, but as a percentage of GDP the deficit figure has come down marginally, mainly on account of GDP expansion in 2018-19.
Unemployment at 45 yrs high
The government also confirmed on Friday that the unemployment rate was 6.1 per cent of total labour force during 2017-18, which is the highest in 45 years.
The data was released on Friday by the statistics ministry after a new cabinet under Prime Minister Narendra Modi took charge on Friday.
It showed that 7.8 per cent of all employable urban youth were jobless, while the percentage for the rural was 5.3 per cent.
Joblessness among male on all India basis was 6.2 per cent, while it was 5.7 per cent in case of females.
The Modi government won a huge majority despite concerns over jobs and farm prices.
The government, however, declined to provide comparable numbers for the jobless rate. Chief statistician Pravin Srivastava told reporters, "It's a new design, new metric… It would be unfair to compare it with the past."
Chief statistician Pravin Srivastava, while releasing the report, said the figures from the past were not “strictly comparable” due to a change in sampling design and frame, but the PLFS report itself has compared figures from the past. The report has also given an explanatory note on the change in sampling design, data collection methods, sample collection, among others.
The statistics ministry also added that female labour participation rate in urban areas for the quarter ending December 2018 was 19.5 per cent, while it was 73.6 per cent for males.
Half of India’s working-age population (15 years and above), for the first time, is not contributing to any economic activity, according to the National Sample Survey Office’s (NSSO’s) latest jobs survey. The labour force participation rate (LFPR) — the share of the population who are either working or available for work — stood at 49.8 per cent in 2017-18, falling sharply from 55.9 per cent in 2011-12.
More than a decade ago, in 2004-05, 63.7 per cent of the population was part of the labour force.