India Ratings Revised Its GDP Growth Downwardly to 7.3% for FY20

Home »  Personal finance news »  India Ratings Revised Its GDP Growth Downwardly to 7.3% for FY20
India Ratings Revised Its GDP Growth Downwardly to 7.3% for FY20
Himali Patel - 01 May 2019

India Ratings and Research (Ind-Ra) on April 30, revised its gross domestic product (GDP) growth estimate for FY20, which marginally went down to 7.3 per cent from its previous forecast of 7.5 per cent. This comes on the back of the lower-than-normal monsoon prediction for 2019 and the loss of momentum in the industrial output growth. Further, the slow progress on cases referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, towards resolution of the non-performing assets of the banking sector has become a lengthy process.

“Given the Indian Meteorological Department expects the monsoon to be near normal (96 per cent, error ± 5 per cent) and private weather forecaster Skymet Weather Services expects the monsoon to be below normal (93 per cent, error ± 5 per cent) in 2019, Ind-Ra estimates agricultural gross value added growth at 2.5 per cent (earlier forecast 3.0 per cent) for FY20 compared with the 2.7 per cent recorded for FY19. The key support to the gross value-added growth in FY20 is likely to come from services (8.3 per cent), followed by industry (7.0 per cent),” noted India Ratings in a circular.

According to Ind-Ra, the inability to revive the stuck capital back into the production process will have implications for investment recovery.

“Although the average 9.5 per cent investment growth during FY17-FY19 is quite healthy compared with the average 3.6 per cent GFCF growth over FY14-FY16, the current investment recovery is heavily dependent upon government capex spending as incremental private corporate capex is yet to revive,” said Ind-Ra research note.

India’s growth runs on a domestic demand, unlike the export-led growth of China. Although exports have played a pivotal role in boosting India’s GDP growth over the past one and half decades, trade frictions arising due to US actions or counteractions by affected countries had kept the external environment challenging in 2019. Ind-Ra believes that when it comes to FY20 budget, more clarity would emerge only when the full budget would be presented by the new government on July 2019. Further, they believe even the new government is likely to continue and build on the fiscal consolidation steps taken so far by the current government.

Domestic Automobile Industry Sales Dropped On Weaker Demand
HUL Shareholders To Receive Final Dividend of Rs. 13 Per Share

Related Articles