Ahead of Budget 2019-20, Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and the newly formed government got a reality check in the form of disappointing Gross domestic product (GDP) data. The Central Statistics Office (CSO) released the data showing that the economic growth slipped to 5.8 per cent in the fourth quarter of 2018-19. There are a few worrying factors that have surfaced along with this GDP data.
One of these worrying factors ahead of Union Budget 2019 is the truncated GDP growth rate which was the lowest in five years. India witnessed the previous low in 2013-14 during the Congress-led UPA era. Another key takeaway from this stat was that India fell off from the position of the world’s fastest-growing major economy as China overtook with a current growth rate of 6.4 per cent. The fall in GDP growth is primarily due to a slowdown in the agriculture and manufacturing sectors. Also, a separate data revealed that unemployment reached an unwanted high of 6.1 per cent. Reports said this was the highest rate of unemployment in 45 years, though the Niti Aayog disputed it, saying that the figure is not comparable to previous years because of a change in methodology.
In the agriculture sector, forestry and fishing sectors Gross Value Addition (GVA) contracted by 0.1 per cent in the fourth quarter against 2.8 per cent growth in the third quarter of the fiscal year. It was 6.5 per cent in the corresponding period in the previous fiscal. The trend was similar in the manufacturing sector as the GVA expansion slowed down to 3.1 per cent from 9.5 per cent during the fourth quarter of 2017-18.
The challenges before the Modi government in Budget 2019 are therefore to take back India to 7 per cent growth track. India also needs to topple China from the numero uno spot to regain the status of the world’s fastest-growing major country. PM Modi has always talked about the importance of youth and to cheer them, the government needs to accelerate the employment growth sooner rather than later. For the agriculture part, PM Modi has time-to-time stressed on his government’s ambitious agenda of doubling the farmers’ income by 2022. However, to achieve that, the government needs to take steps which will boost agriculture. Modi government has announced that Rs 6,000 per annum financial support would be extended to all farmers. The government has also rolled out a pension scheme for farmers to bring some cheers to the agrarian community.