Recession knocking at the door!
Below are the five key points which underpin the fact that India is experiencing a venomous slowdown.
1. Stock Market – A country’s stock market is the reflection of its economy and the data of Indian bourses suggests weak economic scenario. As on 30th August’19, Nifty50 gave a return of -7.7% in past 3 months and -6.4% in last 1 year.
2. Credit Growth – Since IL&FS fiasco and shadow banking crisis, credit growth has remained subdued. India’s bank loan growth slowed to 12.2% as at 2nd August, 2019. The below chart shows the downtrend in the bank loan growth rate during the past few months.
3. Automobile Crisis – Unarguably, automobile sector is the worst hit in the current scenario. Wholesale vehicle sales across all categories were down by 12.35% in the first quarter of FY20. Approximately 2 lakh people have lost their jobs in the automobile dealership industry in the past 3 months. Consequently, unemployment in the world’s second most populous country is at its 45 year peak.
4. Consumption Slowdown – Consumption once a star performer in the India’s growth story has started losing its stardom. The private final consumption expenditure (PFCE) grew at the slowest pace of 3.14% in the past 4 years.India Inc’s two most reputed FMCG companies HUL & Britannia Industries recorded a 7% dip in their volumes in the first quarter of FY20.
5. GDP – GDP numbers of Q1 confirmed the brisk pace of Asia’s third largest economy. India’s GDP grew at the rate of 5% in April-June quarter of 2019, slowest since 2013. Slowdown in the Indian economy was due of private sector’s lukewarm demand which is expected to be counterbalanced by public expenditure in the coming period.
It will be a tough job for our first full time lady finance minister to bring back the economy on track which is experiencing a frightening nightmare. Although a series of reforms have been introduced, the success of it is under a gloomy sky!
Source: Investing.com, Business Standard, ET, Livemint, RBI