While securing 63 63rd place among 190 countries in The World Bank’s index of ease-of-doing business, India’s confidence in business index dropped to 15.3 percent in October 2019.
Recently, the rating agency Moody’s reduced India’s sovereign rating outlook from stable to negative and suggested that if growth in GDP does not improve, the government could be faced with challenges in reducing the deficit and controlling the rising debt burden.
Index of Industrial Production
As per the data published on Monday, Indien’s industrial production fell 4.3 percent in September. This was the lowest level in more than eight years after the series was launched in April. It was the second consecutive month where manufacturing decreased. The decline was seen in all the components of IIP, which includes manufacturing, mining, and electricity.
Decline in GDP
GDP, also known as the Gross Domestic Product, is an important measure of growth in the economy because it measures the amount of products and services that are produced by the country over a specific period. The increase in GDP of India is now 5 percent during the period between April and June of this year. It is the lowest rate of growth over the past six years. The previous year, in the same period, the GDP growth was at 8 percent.
The decline in consumption and the low manufacturing figures are two major factors behind the slowing rate of growth in GDP. India’s urban or rural population is also experiencing a decline in their incomes due to a drop in wages for construction and job losses across the manufacturing and auto industries.
Fall in Diesel Demand
Consumption of diesel is directly linked to the consumption patterns within the economy. Since diesel is utilized to transport goods, including foods and other consumer items, A decrease in diesel consumption indicates lesser movement of goods and, in turn, suggests lower consumption. There was a dramatic decrease of 3.3 percent in the amount of diesel consumed in September 2019 compared to the time a year ago.
However, it needs to be noted that some of the reduction could be caused by Indian Railways going ahead with its plans to electrify its routes. Railways are among the largest consumers of diesel in the nation due to its huge fleet of locomotives operating on diesel.
Auto Sector Woes
Despite a brief respite in October due to the holiday season the sales of automobiles have been falling over the last year. There was some relief in October, as the sales of passenger vehicles at retail increased by just 0.3 percent, largely because of an astronomical 22.2 percent increase in the retail sales of utility vehicles, according to data provided by the Society of Indian Automobile Manufacturers.