Ministry of Finance has released a monthly report for March 2019. It stated that the economy has slowed down slightly in 2018-19.
Reasons for the dip are the declining growth of private consumption, tepid increase in fixed investment, and muted exports.
“On the supply side, the challenge is to reverse the slowdown in the growth of the agriculture sector and sustain the growth in the industry. On the external front, current account deficit as a ratio to GDP is set to fall in Q4 of 2018-19, which will limit the leakage of growth impulse from the economy.” said the report.
As per the report, “Monetary policy has attempted to provide a fillip to the growth impulse through cuts in repo rate and easing of bank liquidity. The room for this monetary easing has been created by low inflation in 2018-19, although it has started to inch up in the last few months of the year.”
Gross Fiscal Deficit of the Centre has steadily declined in the last few years, capital expenditure has been volatile with 3.4 in 2018-19. Current account deficit as per cent of GDP improved in Q3 and is set to further improve in Q4 of 2018-19 as the dip in imports has improved the merchandise trade deficit as per the report.
In sectoral growth, Growth in GVA in agriculture has been slowing since Q1 of 2018-19 and may continue to fall in Q4 as well; moderation in food deflation may soften this decline towards the end of the year. Also, foreign Exchange Reserves in terms of months of import cover has fallen from 14 months from April 2016 to 9 months in October 2018; however, the import cover has been increasing since then.
The growth outlook is upbeat as the SENSEX/NIFTY-50 have risen in Q4 of 2018-19.