India Ratings and Research (Ind-Ra) has revised India’s gross domestic product (GDP) growth forecast for fiscal 2019-20 to 6.7 per cent (six-year low) from the earlier 7.3 per cent. It expects this fiscal to be the third consecutive year of subdued growth pushed by several factors, including a slowdown in consumption demand and decline in manufacturing growth.
Other factors are delayed and uneven progress of monsoon so far, inability of Insolvency and Bankruptcy Code to resolve cases in a time-bound manner and rising global trade tension adversely impacting exports, according to a press release from the organisation.India Ratings and Research (Ind-Ra) has revised India's gross domestic product growth forecast for fiscal 2019-20 to 6.7 per cent (six-year low) from the earlier 7.3 per cent. It expects this fiscal to be the third consecutive year of subdued growth pushed by several factors, including a slowdown in consumption demand and decline in manufacturing growth.#
Even on a quarterly basis, the first quarter (Q1) of this fiscal is expected to be the fifth consecutive quarter of declining GDP growth. Ind-Ra expected it to come in at 5.7 per cent, while the latest government data show the figure is 5 per cent.
The slew of measures announced by finance minister Nirmala Sitaraman on August 23 to revive the economy are likely to support growth only in the medium term, but Ind-Ra expects GDP growth to recover to 7.4 per cent in the second half of this fiscal, mainly on account of the base effect.
Private consumption, which has been the mainstay of aggregate demand, has in fact come under pressure in urban as well as rural areas lately. While the reduced income growth of households has taken the sting out of the urban consumption, drought and near-drought conditions in three of the past five years coupled with collapse of food prices has taken a heavy toll on rural consumption, the agency said.
Even investment, particularly private corporate investment, has remained sluggish over the past few years. Ind-Ra believes revival of private investment demand will be a long-drawn process.
Government expenditure continues to be steady and is expected to grow at 10.6 per cent this fiscal. It was 9.2 per cent in the last fiscal.
Due to delayed and uneven monsoon, Ind-Ra expects agricultural gross value added (GVA) to grow at 2.1 per cent this fiscal, lower than the last fiscal’s 2.9 per cent. Overall GVA is expected to grow at a six-year low of 6.5 per cent this fiscal compared to 6.6 per cent in the last, driven by services (7.9 per cent) and industry (6.1 per cent).
Food and crude oil prices, key drivers of inflation in India, are currently benign and likely to remain so during the remainder of this fiscal. (DS)
ALCHEMPro News Desk – India
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