What GDP growth means for you?
The Reserve Bank of India growth forecast for financial year 2019-20 showed India’s economy slowing down as the growth in GDP during the 2018-19 stood at 6.8%.Updated: Jun 10, 2019 11:00 IST
INDIA’S GROWTH PLUNGED
Last week, the Reserve Bank of India (RBI) revised its growth forecast for FY2019-20 down to 7% from 7.2%. “A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern,” the RBI said. This comes on the back of the recently released numbers from the government which showed India’s economy slowing down as the growth in GDP during the (financial year) FY 2018-19 stood at 6.8%, lower than 7.2% in the previous FY. For the fourth quarter FY19, GDP growth plunged to a five-year low to 5.8%.
WHAT DO GDP NUMBERSTELL?
The deceleration in growth is primarily due to low growth in agriculture, mining and quarrying and public administration, defence and other services, SBI noted in a report. GDP is an economic statistic which attempts to measure the economy through the goods and services we use in a FY. For instance, the cost of a meal you eat in a restaurant, the pair of shoes you bought, the road construction, the loans you took from a financial institution and the toll you pay at a highway are all including while calculating the GDP of a country. GDP only measures everything that happens within the country.
WHAT IT MEANS FOR YOU?
When the growth in GDP is slowing down, it indicates that the economy is not healthy. Considering that the businesses are not doing well, there will be less demand for jobs and would also trigger low wages. It can also spread fear of economic slowdown causing businesses to cut their spending in the near-term. The GDP data also gives a sector wise breakup showing the pain in specific sectors which is causing the deceleration in the growth. If the GDP is rising, it means the economy is expanding and the overall income will be going up. However, rising GDP doesn’t mean more happiness as GDP doesn’t factor it.
First Published: Jun 10, 2019 11:00 IST