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Consumption is the key, not easy to stimulate either govt or private spending

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As anticipated, much of the slowdown in the economy during Q3FY19—growth came in at just 6.6% year-on-year (y-o-y)—was due to slower government consumption and, to a lesser extent, moderating private consumption. Government consumption moderated to 6.5% y-o-y from 11.1% y-o-y in Q2FY19. Private final consumption expenditure increased at a lower 8.4% y-o-y, from a revised 9.8% y-o-y in Q2FY19. Even this is hard to comprehend given the festive season was one of the dullest ever, resulting in weak sales of durables such as cars.

Tighter financial conditions since September 2018, after the crisis in the Non-Banking Financial Companies (NBFC) space, have choked off the flow of credit to consumers. Liquidity will remain tight given the relatively slow growth of deposits, making loans........

© The Financial Express