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India’s GDP Drops Down To 5.8% In March Quarter, China Takes Over Its Position

India’s GDP went up to 5.8 per cent in the January- March quarter as shown by government data on Friday. With this comes India’s loss of its position as the fastest-growing major economy of the world to China for the first time in one-and-a-half years. China’s economy showed a growth of 6.4 per cent in the March quarter.

Friday’s data also meant the economy logged an average growth of 6.8 per cent for the full financial year 2018-19.

Here are 10 things to know:

  • India’s GDP growth in the quarter ended March 31 was much worse than economists’ expectations.
  • A survey of economists by news agency Reuters had forecast GDP growth at 6.3 per cent annually in the quarter ended March 31.
  • The Ministry of Statistics revised economic growth for the fiscal year to March 31, 2019 to 6.8 per cent from 7.0 per cent estimated earlier.
  • The slowdown may lead to another rate cut by the central bank in its June policy review, say economists.
  • The RBI had in its bi-monthly monetary policy review in April lowered its GDP growth projection to 7.2 per cent in 2019-20, from 7.4 per cent.
  • Citing “evenly balanced” risks, the RBI noted that it expects GDP to grow in the range of 6.8-7.1 per cent in the first half of current financial year, and 7.3-7.4 per cent in the second half.
  • The Central Statistics Office (CSO) had earlier also projected GDP growth to average at 7.2 per cent in the financial year 2018-19.
  • The RBI’s monetary policy committee (MPC), which has cut policy rates by 50 basis points this year, is expected to cut the repo rate by a further 25 basis points at its June 4-6 meeting, bringing it to 5.75 per cent, the lowest since July 2010, according to Reuters.
  • Retail inflation has stayed below 3 per cent for last six months, possibly low enough to take the risk of cutting rates without waiting to seeing whether the monsoon rainy season starting next month holds any danger of a spike in food prices.
  • Meanwhile, the government on Friday named Nirmala Sitharaman as the next finance minister.