Economists say growth for FY20 may slip to around 5%

Source: The Economic Times, Nov 13, 2019

 Two of India’s leading banks see growth slowing to 5% in the current financial year, following a sharper-than-expected contraction in industrial production in September and little evidence of a meaningful recovery. GDP grew 6.8% in FY19.

Growth in the July-September period may have dropped to 4.2% from 5% in the first quarter, according to estimates compiled by ET, increasing pressure on the government to take more steps to revive sentiment and demand. Official GDP data for the second quarter will be released on November 29 and the first full-year estimate will be available in January.

“The second-quarter GDP growth rate is likely to slip to 4.2% on account of low automobile sales, deceleration in air traffic movement, flattening of core sector growth and declining investment in construction and infrastructure,” according to Ecowrap, a monthly report by the Economic Research Department of State Bank of India (SBI).

The SBI report pegged full-year growth at 5%, down from 6.1% it had estimated earlier and expects “larger rate cuts” from RBI in the December monetary policy review, although it cautioned against such a move. The economy grew 5% in the June quarter, its slowest pace in six years.

Data released on Monday showed industrial production contracted 4.3% in September, the worst performance since October 2011. For the six months to September, industrial growth was 1.3% against 5.2% in the same period last year.

The numbers triggered a raft of downgrades, even sharper than those after the first-quarter GDP estimates were announced in end-August.

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Q2 GDP growth could fall below 5%

Source:, Nov 11, 2019

New Delhi: With industrial output in the September quarter contracting 0.4% from a 3% expansion in the preceding three months, economic growth is likely to slow to less than 5% in the quarter ended September, data for which is to be released on 29 November.

The weaker-than-expected economic data emerging from India points to a deepening slowdown in Asia’s third-largest economy, where private consumption, investments and exports have all taken a hit. Economic growth rate had cooled to a six-year-low of 5% in the June quarter.

“GVA (Gross Value Added) and IIP measure two different data points and industrial GVA growth has generally been in excess of IIP growth. However, in Q2 of FY20, industrial GVA growth is likely to be lower than 2.7% achieved in Q1 of FY20,” said Devendra Kumar Pant, chief economist at India Ratings.

Nomura has projected September quarter GDP growth to decelerate to 4.2% from 5% in the June quarter of FY20. The brokerage last week cut its overall GDP growth forecast for FY20 to 4.9% from 5.7% estimated earlier, the lowest so far among forecasting agencies.

SBI in its Ecowrap report released last week said it is less hopeful of a growth pick-up in Q2 FY20. “Out of 26 indicators, only 5 indicators were showing acceleration in September. This indicates the demand slowdown in the economy is still significant and would take longer time to recover. If we map the leading indicators showing acceleration, there is a distinct possibility that growth in GDP in Q2 will be lower than 5%,” the report said.

The Narendra Modi administration has taken a series of steps to reverse the slowdown, including a cut in the corporate tax rate in September. The Cabinet cleared a proposal last week to set up a 25,000 crore debt fund to finish incomplete housing projects, a move that is expected to boost cement and steel sectors in the coming months.

Sachchidanand Shukla, chief economist at Mahindra Group, said the government has tried to address sectoral pain points through specific measures. Most of these measures are addressing supply-side concerns and not those on the demand side, barring RBI’s rate cuts, he added. “We will see from Q3 onwards a slight recovery and may end Q4 probably with a growth rate of close to 7%. The factors that will support this recovery are a favourable base, some favourable lagged effect of RBI’s policy rate cuts meant to infuse liquidity and government spending. This recovery will be clearly visible from Q4. Please bear in mind, large part of it will be statistical,” he added.

The country needs to create employment and livelihood so that income levels go up which will help resolve the weakness in the economy rather than resorting to patchwork aimed at boosting investor sentiment, said Arun Maira, former member of Planning Commission of India. “We need a broader policy for improving incomes and livelihood. Short term measures will not help recover the economy in a sustainable way. We need an industrial policy that focuses on the bottom of the economy, that is, small enterprises in various sectors, which will create more employment and income for people. From this, we can derive the solutions for other facets of the economy,” Maira added.

Govt may change new base year for GDP to 2017-18; decision likely soon

Source: Business Standard, Nov 05, 2019

New Delhi: The Ministry of Statistics and Programme Implementation will decide on a new base year for the GDP series in a few months, a senior official said on Tuesday.

The ministry is working to bring in a new series of national accounts which would result in change in the existing base year of 2011-12.

Though the ministry is considering 2017-18 as the new base year, no decision has been taken as the committees of experts are awaiting some more data before finalising their opinion.

“The decision to change the base year (of GDP) would be taken in next few months. We are waiting for Annual Survey of Industries and the Consumer Expenditure Survey. All the preparatory work is getting ready for that.

“Once the result is out, we will place it before the respective committees (to decide about the base year),” MOSPI Secretary Pravin Srivastava told reporters at a FICCI conference adding that the decision has to be taken considering global and national scenario as well.

He also said that earlier when new series with 2011-12 base year was being worked out, the ministry thought of revising it to 2009-10.

But then the economists decided that 2009-10 was not a good year globally and domestically and finalised 2011-12 as the base year for new series of GDP.

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World Bank says slowdown in India is severe, cuts GDP forecast to 6%

Source: Business Standard, Oct 13, 2019

The World Bank cut India’s economic growth forecast by the most among South Asian nations on Sunday, below the outlook pegged by the nation’s central bank for this year, mainly because of a deceleration in domestic demand.

India’s gross domestic product growth is projected at 6 per cent in the fiscal year started on April 1, compared with 7.5 per cent forecast in April and 6.8 per cent recorded a year earlier, the bank said in its latest South Asia Economic Focus report. Growth is expected to gradually recover to 6.9 per cent in 2020-21 and to 7.2 per cent in the following year, it said.

“India’s cyclical slowdown is severe,” the report said. The weakness is mostly due to a deceleration in local demand, according to the bank. “In such a weak economic environment, structural issues surface and the weak financial sector is becoming a drag on growth.” Read the rest of this entry »

India’s real GDP growth likely to be 5.2 per cent this fiscal: EIU

Source: The Economic Times, Sept 30, 2019

NEW DELHI: India’s real GDP growth for the current financial year is likely to be 5.2 per cent as muted business confidence, subdued demand conditions and concerns in the financial sector are hurting investments, according to the Economist Intelligence Unit.

According to the the Economist Intelligence Unit, annual real GDP growth dropped to a six-year low of 5 per cent in the second quarter and data from the third quarter show “little sign of improvement”.

India’s economic growth has slumped for the fifth straight quarter to an over six-year low of 5 per cent in the three months ended June as consumer demand and private investment slowed amid deteriorating global environment. Read the rest of this entry »

ADB sharply cuts India’s GDP growth forecast to 6.5% for FY20

Source: The Hindu Business Line, Sept 24, 2019

New Delhi: The Asian Development Bank on Wednesday sharply cut India’s growth forecast to 6.5 per cent for the current fiscal, weighed down by the GDP growth rate dipping to a six-year low in the first quarter.

“India’s growth forecast for fiscal year 2019 (FY20) is lowered to 6.5 per cent after growth slowed markedly to 5 per cent in the first quarter, April-June,” said the Asian Development Outlook (ADO) 2019 Update.

In its supplement to the ADO in July, the Manila-headquartered multilateral funding agency cut the country’s GDP growth estimate to 7 per cent for 2019-20 on the back of fiscal shortfall concerns. Read the rest of this entry »

Ficci survey pegs India’s GDP growth rate at 6.9% for the entire year

Source: Business Standard, Aug 27, 2019

Ahead of the release of the GDP data for the first quarter of FY20 on Friday, Ficci surveyed economists to sense their assessment of the economy. According to this survey, economic growth is likely to be 6 per cent in the first quarter of the current fiscal year, which would accelerate to 6.5 in the second quarter. For the entire year, the growth was pegged at 6.9 per cent.

This is median forecast and there is huge difference between the minimum and maximum forecasts. The investment rate is expected to go up in the second half as the first half would yield in the range of 30.7-30.8, while it may stand at 32.1 per cent for the entire year. In fact, the investment rate might inch down in Q2 against Q1 of the current fiscal year.