In 2016, India had one of the fastest-growing economies in Asia with economic growth of around 9 percent year-on-year. Fast forward three years and the country is now experiencing a dramatic economic slowdown that has seen its expansion rate slump by more than half this year.
According to newly published data, India's gross domestic product grew by just 4.5 percent for the third quarter of 2019. This was the lowest level recorded since early 2013. It was also a significant drop from the 7 percent GDP growth the country was enjoying over the same quarter last year and the 5 percent GDP growth in the previous quarter, April to June, this year.
The 4.5 percent GDP growth in the third quarter is the sixth consecutive quarter of continuous decline. Economists have stated that the gradual slide can be partially attributed to the country's slowing production and the weakening of its factories.
The country's manufacturing index for July to September this year shrank by 1 percent, a stark contrast to the 6.9 percent expansion over the same period last year. Apart from its manufacturing, India has also seen a rapid decline in its agricultural growth rate, which has slumped by more than half when compared to the same period last year.
The GDP growth in the third quarter of this year is the lowest ever recorded under Prime Minister Narendra Modi. The country's prime minister, who took power more than five years ago, long promised to boost India's economy and take it to "new heights" by creating millions of jobs per year.
While Modi's overall plan had seen India's economy grow at unprecedented rates in the first years of his term, several factors have contributed to its steady decline over the last two years. India's automotive sector had steadily seen lower sales figures, resulting in the loss of hundreds of thousands of jobs. Meanwhile, its consumer goods sector also suffered, leading to companies reporting lower revenues due to the slowing demand.
To combat the economic growth slide, Modi, who had won his re-election by a landslide in May, plans to impose several measures to boost the economy. Part of the measures will include relaxed regulations to give companies some room to breathe. Modi also plans to roll out tax breaks for new companies. To bolster spending, India also announced plans to offer cheaper loans for home and car buyers.
The Reserve Bank of India, the country's central bank, has been cutting interest rates to combat the GDP growth slowdown. The bank is expected to slash rates once again given the country's recent performance in its latest quarter.
