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Economic gloom

4 3 0

Diwali, the festival of lights and traditionally the Hindu New Year, kicks off with Dhanteras, the celebration of wealth and prosperity. This is one occasion when spending in India kicks into high gear. The lights, however, are considerably dimmer this Diwali. There isn't much to cheer about as India Inc stares into what appears to be the bottomless abyss of an economic downturn.

GDP growth slowed five quarters in a row, declining from a peak of 8.1 per cent at the beginning of the first quarter of FY19 to 5 per cent in the first quarter of this fiscal year. The Reserve Bank of India (RBI) has lowered India's growth forecast for FY20 to 6.1 per cent from 6.9 per cent it projected earlier. The World Bank has cut India's GDP growth forecast from 7.5 per cent to 6 per cent this year.

India is a consumption-driven economy. When consumers buy goods and services, the wheels of the economy turn. That has not been happening for several quarters and for various reasons.

Fewer jobs (at 6.1 per cent in 2017-18, unemployment was the highest in 45 years, as per official data), a freeze in salary hikes and bonuses, layoffs and uncertainty in businesses are making people cut down on spending. Incomes and wages in rural India, where 67 per cent of India's population lives, have been hit because of low food prices. Agriculture GDP grew just 2........

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