India is set to clock economic growth of 5 per cent in the current fiscal year, sharply down from last year’s achievement of 6.8 per cent, showed the data released by the National Statistical Office (NSO).
This will be the lowest pace of growth since 2008-09 (FY09), the year of the global financial crisis. The estimate is, however, in line with the Reserve Bank of India’s projection for the year.
Importantly, manufacturing is expected to grow at 2 per cent, the lowest since at least FY06, and would make the current industrial slowdown the worst in nearly two decades. Similarly, investments are projected to grow at only 0.97 per cent — the lowest in at least 15 years.
Investments as represented by gross fixed capital formation (GFCF at constant prices) were slated to contract by 0.5 per cent in H2FY20, the sharpest decline in about two decades. The share of investments in the economy has reduced to one-fourth in two decades, from one-third. The investment rate (or rate of GFCF to GDP in nominal terms), at 28.1 per cent, is slated to be the worst since FY05.
Industrial activity and investment had not declined to such a low even in the year of the financial crisis and the subsequent years during, which the Indian economy was among the 'fragile five'.