India’s Falling Growth Rate

 

Relevancy

  • G.S. Paper 2
  • Highlights of the official GDP data
  • Reasons For Slow Growth Rate In India

Recently

  • India has reported the lowest GDP growth rate in three years for the April-June quarter, after overtaking China as the fastest growing big economy in the world in 2015.
  • Decline in growth rate was being speculated post-demonetisation, the government maintained that it would not affect the growth rate much.

Highlights of the official GDP data

  • The data showed that there is a decline in India’s GDP growth rate to 5.7 for the March-June 2017 quarter, which was 7.9 per cent in the corresponding quarter in last fiscal.
  • This is the lowest GDP growth rate in three years.
  • The GDP growth rate has shown a continuous decline in last six quarters.
  • Economic activities that saw growth of over 7 per cent in the first quarter are trade, hotels, transport and communication, among others.

Reasons For Slow Growth Rate In India

  • Negative impact of demonetization
  • Principal decline in growth is due to industry, which grew only at 1.6% compared to 7.4% last year.
  • Destocking of goodswhich might have happened prior to the introduction of the GST also had a negative impact
  • Decline in investment rate in the economy in the form of private sector and domestic investment.
  • The health of Indian banks is withering i.e. increasing NPAs, which are not attracting more private sector investment.

 

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