Economy

The government will release data on gross domestic product (GDP) for the quarter ended June 30 today. Many economists expect the data to show that the expansion in India's GDP slowed for a fifth quarter in a row. According to a poll by news agency Reuters, the country's GDP growth likely stood at 5.7 per cent in the first quarter of the current financial year. If that prediction comes true, it would mark the lowest rate of economic growth recorded since the quarter ended March 2014, when it had stood at 5.3 per cent. A downturn in Asia's third-largest economy is denting sales of everything from cars to clothing, forcing companies to curtail production. In a spate of announcements within a week, the government has eased foreign investment rules and encouraged banks to make loans cheaper to revive growth.

Finance Minister Nirmala Sitharaman is still considering whether to use the windfall from the central bank to cut borrowings or boost spending.

The demand for the Rs 500 bill has soared the highest and now accounts for over 51 per cent of the value of currency in circulation, said the report.

The Sino-US trade war has also rattled global automotive supply chains and affected big automakers.

The government on Friday eased FDI rules in digital media, single brand retail, coal-mining and contract manufacturing.

The RBI report said reviving consumption and private investment have assumed the "highest priority" now for all.

If the latest number for expansion of gross domestic product is 5.7 per cent or less, the quarter had the slowest expansion in 21 quarters, since 5.3% in January-March 2014.

The government also allowed 100 per cent foreign direct investment in contract manufacturing and eased sourcing norms for single-brand retailers.

Commerce Minister Piyush Goyal said the 30 per cent local sourcing norms in single-brand retail remains, but its definition has been expanded.

The government also announced FDI in digital media wherein foreign investors can buy 26 per cent stake with its approval.

With most engines of growth stuttering, the economic slowdown would continue and the April-June GDP figure could slip to 5.7 per cent.

Finance Minister Nirmala Sitharaman last week announced various measures to spur growth, including hastening the capital infusion into state-run lenders.

A day after the Central Board of Reserve Bank of India decided to payout Rs 1.76 lakh crore from its reserve and surplus to the government of India, Finance Minister Nirmala Sitharaman on Tuesday said that the government has not yet decided on how the funds from the central bank will be utilised.

The record transfer will boost the government's finances at a time it strives to tackle a nearly five-year low economic growth.

The transfer of surplus and excess dividend is in line with the recommendations of the Bimal Jalan Committee, which was tasked to review the Economic Capital Framework of the RBI.