India’s gross-domestic product expansion dipped below 6% last quarter, forcing the country to surrender its title to China as the world’s fastest-growing major economy as citizens and companies held back on spending.
China’s economy had grown by over 6 percent in the fourth quarter. However, on an annual basis, India’s 6.8 percent GDP growth is still over that of China.
In the past financial year – April 2018 to March 2019 – the economy grew by 6.8%. And in the quarter between January and March, it expanded by just 5.8% – falling behind China’s pace for the first time in nearly two years.
These are the first set of figures since Narendra Modi secured a second election victory this month. India became the world’s fastest growing economy during his first term.
But the latest figures, which shows sharp slowdown in growth, India has lost its fastest growing economy tag to China after two years.
This will put immense pressure on Narendra Modi’s government as their immediate concern would be to restore confidence in the economy through fiscal measures.
Over the last 15 years or so, India’s economic growth has been driven by domestic consumption and the latest data showed weaker consumer demand. Investment also fell to 3.6% from 10.6% in the previous quarter.
According to Finance Secretary Subhash Chandra Garg, the turnaround is possible only after the next quarter. That means, the three months of April to June – could also be “relatively slower”.