With India in the midst of the aggressive campaigning that fills a long-drawn-out, seven-phase general election schedule, the finance ministry has come out with a report stating that the economy slowed marginally in the last fiscal year (2018-19).

The report, released by the Department of Economic Affairs, cited declining growth of private consumption, weak increase in fixed investment and muted exports as reasons for the slowdown.

The government has lowered its estimates of economic growth for Q1 and Q2 of FY19 to 8% and 7%, respectively, from its earlier estimates of 8.2% and 7.1%, respectively.

The report admitted that the farm sector is facing a slowdown and it will be an uphill task to reverse it. It also said that sustaining industrial growth will be a challenge.

The gradual rise in retail inflation is also a matter of concern, and so is the appreciation of the currency exchange rate, which could pose a challenge to exports, the report added.

However, on the positive side, the report noted that the current account deficit as a ratio to gross domestic product is likely to have fallen in the January-March quarter of FY19, which would limit the leakage of growth impulse from the economy, while the fiscal deficit has also come down to the targeted 3%.

In addition, an increase in foreign exchange reserves in Q4 of FY19 on account of an improvement in trade balance has increased the import cover for the economy, the report noted.

During the third quarter of FY19, the country’s GDP grew at a six-quarter low of 6.6%, because of subdued expansion in agriculture, manufacturing and government expenditure. However, investment activity continued to grow at a healthy pace.