India’s gross domestic product (GDP) is expected to register a growth of just 5% in the financial year 2019-20, according to a World Bank report. While the projection for the current financial year is not very good, the report titled January 2020 Global Economic Prospects also states that India’s GDP will grow at 5.8% in the next financial year 2020-21.
Tighter credit conditions in the non-banking sector are contributing to a substantial weakening of domestic demand in India which is expected to pick up, supported by policy easing and gradually improving business confidence in response to recent reforms.
The world economy, too, will see a slight upward trend in 2020 as the World Bank predicts a gradual recovery in investment and trade gradually from the “significant weakness” seen in 2019. However, the report also warns that downward risks persist.
“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction. Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu.
Even the government has admitted the Real GDP or GDP at Constant Prices (2011-12) in the year 2019-20 will grow by 5%. According to the data released on January 7, 2019, by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, the First Advance Estimates of National Income at both Constant (2011-12) and Current Prices will see the GDP reaching Rs 147.79 lakh crore, as against the Provisional Estimate of GDP for 2018-19 of ₹140.78 lakh crore, released on May 31, 2019. As against the 5% growth estimate during 2019-20, the Indian economy had in 2018-19 registred a growth rate of 6.8%.
The NSO data also reveals that Gross Value Added (GVA) at Basic Prices is estimated to increase from Rs 129.07 lakh crore in 2018-19 to Rs 135.40 lakh crore in 2019-20 which means the growth rate in the current fiscal will be 4.9% compared to 6.6% in the previous year.
The sectors which registered growth rate of over 4.9% are, ‘Electricity, Gas, Water Supply and Other Utility Services’, ‘Trade, Hotels, Transport, Communication and Services related to Broadcasting’, ‘Financial, Real Estate and Professional Services’ and ‘Public Administration, Defence and Other Services’ at 5.4%, 5.9%, 6.4%, 9.1% respectively. The growth in the ‘Agriculture, Forestry and Fishing’, ‘Mining and Quarrying’, ‘Manufacturing’ and ‘Construction’ is estimated to be 2.8%, 1.5%, 2.0% and 3.2% respectively.