With the slowdown in gross domestic product (GDP), Prime Minister Narendra Modi-led government may find it difficult to achieve the target of five trillion dollar economy. In fact, there are also signs of poor investment in GDP figures, while investment is considered important to increase the size of the economy. At the same time, experts also expressed apprehensions that the economy will not get the benefit of the policy relief given by the government.
According to GDP figures, gross fixed capital formation (GFCF) during the second quarter of 2019-20 is estimated at Rs 10.83 lakh crore, compared to Rs 11.16 lakh crore in the same quarter a year ago. GFCF is considered as the investment scale for the economy.
In terms of GDP, GFCF stood at 27.3 per cent and 30.1 per cent respectively at current and constant (2011-12) prices for the quarter ended September 2019, compared to 29.2 per cent and 32.4 per cent in the same quarter a year ago. Thus, the GFCF declined by 0.9 per cent and 3 per cent at current and constant prices.
Former Finance Secretary Subhash Chandra Garg said that in the current situation it may take an additional one year for the government to achieve the target of $ 5 trillion economy, while it has been set for 2024-25.
Dr Sunil Sinha, chief economist at India Ratings (Fitch Group), said that the decrease in GFCF for the second consecutive quarter means that the economy is in a constant decline. He said the decline in exports along with the lack in demand is largely responsible for the economic slowdown in India.
