Four months from now, the financial year 2019-20 will come to an end. Eight months have already passed, with such a fall in the GDP growth rate—slowdown in the Indian economy cannot be reversed in the near future. The country cannot realize the budgeted GDP growth rate for this year.
The fall in the GDP growth rate has touched a new low at 4.5 per cent in the second quarter as against 5 per cent in the first. It is the worst growth figure after 2012-13, the base year for the new series of the data. The average growth rate in the first six month is thus merely 4.75 per cent, and then in the last two months, the economic and financial crises have signalled a further decline.
The slowdown has created a huge shortfall in the budgeted estimates of the current financial year. The GDP for the year 2019-20 was projected 2,11,00,607 crore assuming 12 per cent (nominal) growth over the estimated GDP of 1,88,40,731 crore for 2018-19. At the average growth rate of 4.75 per cent, that we have been able to achieve in the first half of the current financial year, the likely shortfall at the end of this year is quite disturbing. How precarious the situation is can be imagined by the fact that the RBI’s transfer of funds to the tune of 1.76 lakh crore to the government of India was 1.25 per cent of GDP in 2018-19.