Ind-Ra cuts GDP growthforecast in FY20 to 6.7%

Agency pegs growth at six-year low

Updated - August 28, 2019 10:31 pm IST

Published - August 28, 2019 10:24 pm IST - NEW DELHI

India Ratings and Research has revised downwards its projection of the country’s GDP growth in financial year 2019-20 to 6.7%, a six-year low, from its earlier forecast of 7.3%, the agency announced on Wednesday.

“The agency expects FY20 to be the third consecutive year of subdued growth pushed by (i) a slowdown in consumption demand; (ii) delayed and uneven progress of monsoon so far; (iii) decline in manufacturing growth; (iv) inability of Insolvency and Bankruptcy Code to resolve cases in a time-bound manner, and (v) rising global trade tension adversely impacting exports,” it said in a report.

The agency expects growth in the first quarter of the current financial year to decline for the fifth consecutive quarter to 5.7%.

Further, it said that the reform measures announced by Finance Minister Nirmala Sitharaman recently would make an impact only in the medium term.

“On August 23, 2019, Finance Minister Nirmala Sitharaman announced a slew of measures to revive the economy, which included addressing some of the woes facing auto sector, MSME, banking sector, capital market, etc.,” the report said. “However, these measures are likely to support growth only in the medium term, but the agency expects GDP growth to recover to 7.4% in the second half of FY20, mainly on account of the base effect.”

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