Narendra Modi govt’s growth challenge
It should worry policymakers that the Indian economy is slowing at a time when global markets are reasonably stable
The Narendra Modi government is facing fresh challenges on the economic front. The pace of economic growth has slowed considerably, with no clear sign of a sharp pullback in the near term. Gross domestic product (GDP) expanded at a modest pace of 5.7% in the first quarter of the current fiscal. Gross value-added (GVA) growth—the preferred indicator of economic activity—came in at 5.6%, compared with 7.6% in the same quarter last year. The slowdown has surprised analysts and most private sector economists have revised downwards their full-year forecast. It now seems difficult for the economy to get close to the Reserve Bank of India’s (RBI’s) GVA growth forecast of 7.3% for the current year. Gross fixed capital formation has slipped below 30% of GDP.