India’s GDP growth set to slow further in Apr-Jun quarter to 5.7 per cent: Nomura

Source: The Economic Times, Aug 21, 2019

India’s economic growth is set to slow further in the April-June quarter of this year to 5.7 per cent amid contraction in consumption, weak investments and an under-performing service sector, says a Nomura report.

According to the global financial services major, even though growth is set to slow further in Q2 (April-June) the economy is expected to see some recovery in the July-September quarter.

“High-frequency indicators continue to show familiar pain points – a deep contraction in consumption, weak investment, a slowing external sector and an under-performing services sector,” Nomura said in a research note. Read the rest of this entry »

15 ways to define India’s slowdown

Source: LiveMint.com, Aug 14, 2019

The rain has stopped. You step out of home to run a few errands. On the way, you find ₹500 note lying on the ground. You pick it up and put it in your trouser pocket, thinking you’ll donate it to the local charity. But you give in to temptation as soon as you cross the local book shop and buy the latest bestseller for ₹500. The bookseller is an alcoholic and uses the money to buy his stock of alcohol for the day. The liquor shop owner takes the ₹500 and walks across to the local cinema and buys the ticket for the latest movie, featuring his favourite heroine. He also buys some atrociously priced popcorn and a soft drink. The cinema owner has to go attend a wedding at the other end of the town and he gives that very ₹500 note to a taxi driver, given that his driver is on leave. Read the rest of this entry »

CRISIL lowers FY20 GDP growth to 6.9% due to monsoon, global slowdown

Source: Business Standard, Aug 01, 2019

New Delhi: Analytics firm CRISIL on Thursday lowered its estimate of India’s GDP growth by 20 basis points to 6.9 per cent for the current fiscal ending March 2020 due to downside risks like weak monsoon and slowing global growth.

In June, the Reserve Bank of India had lowered the economic growth forecast for fiscal 2019-20 to 7 per cent from its April estimate of 7.2 per cent due to a slowdown in domestic activities and escalation in global trade war.

In a report, CRISIL said the slowdown would be pronounced in the first half of the fiscal, while the second half should find support from expected monetary easing, consumption, and statistical low-base effect. Read the rest of this entry »

At $2.73 trn, India’s economy pushed to 7th spot; UK, France march ahead

Source: Business Standard, Jul 31, 2019

New Delhi: The UK and France have toppled India from the position of the fifth-largest economy in 2018, according to data compiled by the World Bank.

Earlier data had shown that India had become the sixth largest economy in 2017, pushing France to the seventh place. However, the latest data showed that India had in fact become the fifth-largest economy that year, ahead of even the UK. Read the rest of this entry »

IMF cuts India’s GDP growth rate to 7% due to subdued domestic demand

Source: Business Standard, Jul 23, 2019

New Delhi: The International Monetary Fund (IMF) has cut its projection for India’s economic growth by 0.3 percentage point to 7 per cent for 2019-20 due to subdued domestic demand. For the next financial year, the projection was also cut by 0.3 percentage point to 7.2 per cent.

“India’s economy is set to grow at 7.0 percent in 2019, picking up to 7.2 percent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than expected outlook for domestic demand,” IMF said in its update on its flagship report — the World Economic Outlook on Tuesday. Read the rest of this entry »

8% annual growth needed for GDP to touch $5 trn by FY25: Economic Survey

Source: Business Standard, Jul 04, 2019

Challenging the traditional theory of economic growth based on equilibrium and silo macro parameters, Chief Economic Advisor Krishnamurthy Subramanian in his maiden Economic Survey for 2018-19, released on Thursday, outlined a model based on constant disequilibrium and complementariness in investments, savings, job creation, demand, exports, and economic growth.

Based on this model, Subramanian explained a strategy to make the economy grow 8 per cent a year, which is needed for gross domestic product (GDP) to touch $5 trillion by 2024-25 as envisaged by Prime Minister Narendra Modi.

For the current fiscal year (2019-20 or FY20), he pegged growth at 7 per cent, only 0.2 percentage higher than 6.8 per cent growth in 2018-19 or FY19. Read the rest of this entry »

World Bank retains India’s growth rate forecast for FY19-20 at 7.5%

Source: LiveMint.com, Jun 05, 2019

The World Bank has retained its forecast of India’s growth rate at 7.5% for the current financial year.

In its Global Economic Prospects report, the World Bank also said growth rate is expected to remain the same for the next two fiscals.

“In India, growth is projected at 7.5 per cent in FY2019/20 (April 1, 2019 to March 31, 2020), unchanged from the previous forecast, and to stay at this pace through the next two fiscal years,” the World Bank said in its report.

According to the report, private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below the Reserve Bank of India’s target.

Support from delays in planned fiscal consolidation at the central level should partially offset the effects of political uncertainty around elections, it added.

The outlook for South Asia over the forecast horizon is expected to remain solid, with regional GDP expected to expand to 6.9 per cent in 2019, 0.2 percentage point down from previous projections owing to downward revisions for Pakistan, but to pick up to 7 per cent in 2020 and 7.1 per cent in 2021.

The contribution of exports to economic activity is expected to remain weak with moderate global trade growth, the report mentioned.

The World Bank, in its report, observed that the main domestic risks to the outlook include a re-escalation of political turbulence amid elections in some countries (Afghanistan, Sri Lanka); fiscal slippages with expanding public spending; and a resurgence of non-bank financial sector funding issues.

Moreover, the Washington-based lender noted that “military skirmishes” between major South Asian countries in mid-February remained contained, and economic repercussions were minor. However, re-escalation of tensions between the two countries could increase uncertainty, depress confidence, and weigh on investment in the region – an apparent reference to the Pulwama terror attack and the retaliatory air strikes carried out by the Indian Air Force (IAF) in Pakistan’s Balakot.

It further stated that the Goods and Services Tax (GST) regime is still in the process of being fully established, creating some uncertainty about projections of government revenues.

In Sri Lanka, the World Bank said a rise in political uncertainty in the months leading up to presidential and parliamentary elections, which will take place in 2019 and 2020, respectively, could weigh on business confidence. In addition, recent security-related incidents could dampen investor sentiment and perceptions.

Another factor accounted for by the World Bank is uncertainty about the Brexit process, which possesses the ability to create a risk to some South Asian economies which have preferential trade agreements or generalised system of preferences with the European Union and significant exports to the United Kingdom, including India, Bangladesh, Pakistan, and Sri Lanka. A no-deal Brexit could have a significant impact on exports of those countries to the UK in the absence of new trade agreements, it contended.