India’s GDP drops down to 6.8%, making China the fastest growing economy; Unemployment at its highest at 6.1%

Dhruvi Modi

On the first day of Modi’s government 2.0, the Central Statistics Office released the GDP growth of India in the fourth quarter of FY18-19. The release states that India’s economy grew slower than expected to a 20-quarter low in the January-March quarter (Q4) with provisional estimates of 5.8% growth, when compared to the 6.6% growth in the previous quarter. The GDP for Q4 in FY17-18 was 8.1%.

This also brought down the overall growth of FY19 to 6.8%, making it the lowest in five years. However, in comparison with China’s growth of 6.4% in this quarter, India was put in the second place for the fastest growing economy in the world.

NBFCs cause for drop in GDP

Finance Secretary Subhash Garg was quoted on a report, “Slow down in the fourth quarter was due to temporary factors like stress in non-banking financial company (NBFC) sector affecting consumption finance.” He also said that the next quarter will see such a drop after the poor performance in Q4, but the economy will pick up in the second quarter of FY19-20, with capital spending expected to revive, even in private investment.

The new government’s first budget is expected to have measures to lift economic growth and revive demand. The budget is going to be presented by the new Finance Minister, Nirmala Sitaraman, on July 5.   

Unemployment highest in 45 years

The unemployment rate in India during FY17-18 was at 6.1%, making it the highest in 45 years, confirming what Somesh Jha, a Business Standard journalist reported in January 2019. The Ministry of Statistics and Programme Implementation released data on Friday that showed that in rural India, 5.8% of men and 3.8% of women were unemployed, whereas in urban areas, it was much higher, with 7.1% men and 10.8% women being unemployed.

An article in The News Minute states that the report also said that in 2017-18,  for educated males (highest level of education being secondary and above), the unemployment rates were 10.5% and 17.3% for men and women of age 15 and above in rural areas, respectively. The same was 9.2% and 19.8% respectively in urban areas.  

Contributing to 27.26% of the population of the country, the youth faced massive unemployment rates, with 19.23% in average. Amongst these, 17.4% are rural men, 13.6% rural women, 18.7% are urban men, and 27.2% are urban women.

There are many factors which have contributed to such a drop in the GDP and unemployment rates, however, when the aforementioned report by Somesh Jha was released in January, many Union Ministers including Arun Jaitley, Smriti Irani and Sadananda Gowda called it a fake, and dismissed it.