The slump in India’s economic growth rate during the first quarter of the ongoing fiscal was more or less expected. Various factors like unprecedented heat wave, less government spending and poor performance of the service sector etc. may be cited as the reasons behind the fall after remaining high for five consecutive quarters. It may also be mentioned that the country recorded a growth rate of 7.8 per cent in the last quarter of the previous fiscal, when the world economy was in turmoil due to various geopolitical tensions. But India managed to register a 7.3 annual growth rate, which was higher than the 7 per cent growth forecast made by the Reserve Bank of India (RBI).
However, the first quarter of the ongoing fiscal was different from the very beginning, as it was an election year in India. Elections had drastically reduced the government spending by nearly 7.7 per cent, which clearly had an adverse effect on the economy. On this, the government should make all possible arrangements to ensure that its expenditure remains unaffected even during the elections. Otherwise, the Indian economy will continue to experience a slump after every five years. Harsh climatic conditions also took its toll on the country’s economy, with the unprecedented heat waves effecting productivity, resulting the growth rate in the primary sector nosediving to 2.7 per cent against 4.2 per cent last year. This called for the need to prevent this particular sector from climatic hazards.
Along with the primary sector, both the secondary and tertiary sectors also witnessed a slowdown. The service sector registered a growth rate of only 7.2 per cent compared to 10.7 per cent during the same quarter in the last fiscal. Several components of the said sector performed below the expectations, and it’s a serious blow as the service sector contributes more to the country’s GDP than the other two sectors. Hotels and real estate saw a significant decline in business which can be blamed both on elections and heat wave — again. The secondary sector also registered a lower growth rate. However, government’s spending is expected pick up as the elections are over, and this will help negate the slump in economic growth considerably. Tourism activities and hospitality sector are expected to pick up as pleasant autumn season has set in, while the agricultural output is expected to be good, thanks to normal monsoon. These factors are expected to give a boost to the Indian economy in the next three quarters.
