The automobile industry, the barometer of economic health of the country, is facing a grave demand slump. Society of Indian Automobile Manufacturers (SIAM), a lobby group for vehicle manufacturers in the country, on Monday made a forecast of single-digit growth for the industry in 2019-20. The data revealed the slowing urban demand with car sales growing by mere 2.4% in last fiscal, the worst performance in the past four years.

The forecast by Siam is to be seen in tandem with the paring of India's growth forecast. International Monetary Fund (IMF) on Tuesday trimmed the growth by 20 basis points to 7.3%, citing loss of momentum. Similarly, Asian Development Bank and Reserve Bank of India had last week peeled off growth projection to 7.2% from 7.4% made earlier, putting blame on the slowing global activities and weakening domestic investments. India's automotive industry, which is the fourth largest in the world, forms around 7% of country's GDP and about 45% of manufacturing GDP.

The impact of regulatory changes, increase in insurance cost and the liquidity crunch arising after IL&FS scam, which forced the industry to go through a subdued growth in past seven months, is likely to spill over to the first quarter of 2019-20.

Hopefully, the demand may pick up in the second quarter onward and peak in the run-up to the new emission regime.