India has lost its place as the world’s fastest economy to China after it went slower than expected in the first three months of 2019. This has happened for the first time in the last two years that India’s growth rate has fallen behind China.
The UN trade agency has estimated India’s growth rate for 2019 to slow down at 6 % as compared to 7.4% of last year. Economists had been expected growth of 6.3 % in the first quarter of this year. In spite of this small difference, India will still be the world’s fastest-growing country after China.
The trade and Development report 2019 released by UN conference on trade and Development (UNCTAD) in Geneva on Wednesday, maps a global slowdown with the world growth rate dropping from 3 % in 2018 to a projected 2.3 for this year. China with a 6.1 % growth rate for 2109 is the fastest growing economy and is just 0.1 % is ahead of India.
World Economy Outlook from the international monetary funds(IMF) is expected to look at the growth rates across the world.
The UNCTAD report said that the slowdown in India “continues a decelerating trend which began four years ago”. “Growth projections for India have been marked down, because of a sharp fall to 5.8% in the first quarter of 2019 (relative to the corresponding quarter of the previous year),” it said. As per a report, “in Asia, the two economies that were among the fastest-growing in the world, China and India, are showing signs of a loss of growth momentum”.
In 2017, Indian exports grew by 6.6% and it went down by 4.3% last year, a report stated. Also, there was a bigger drop-in rate of growth of imports from 11.7% to 3.1 % in the same period. Slower growth in investment was also noticed which fell from 10.6% to 3.6% in the previous quarter.
“Together with projected deceleration in the rate of growth in 2019 for India, where below-target collections from the recently introduced Goods and Services Tax have combined with fiscal consolidation efforts to limit public spending, will further slow growth in the Asian region as a whole,” the report said.
As employment is growing in India, UNCTAD saw several job opportunities in clean energy and green sectors.”It is tempting to see them as potential foundations for local industrial development,” the report said.
World Trade Organisation (WTO) is a barrier in the growth of the solar industry sector as it didn’t find the incentives for domestic production of solar equipment good enough. This could also take off India’s green energy dream from its track.”If trade rules continue to trump environmental and development concerns, it will be difficult to realize the full potential for a Global Green New Deal,” it warned.
Unlike China, India’s economic growth has been driven by domestic consumption from the last 15 years and the current data shows weaker consumer demand. These figures will put pressure on Prime Minister Narendra Modi’s government and Central bank to provide a boost to the Indian economy through Fiscal measures.