Economy

India's growth projection may fall to 6 percent

India's growth projection may fall to 6 percent”

According to RBI's Monetary Policy Report, October 2019: "Taking into account the baseline assumptions, survey indicators, the reductions in the policy repo rate since February 2019, the base effects and model forecasts, real GDP growth is projected at 6.1 per cent in 2019-20 - 5.3 per cent in Q2, 6.6 per cent in Q3, 7.2 per cent in Q4 - with risks evenly balanced".

While credit growth rate to the services sector more than halved to 13.3 per cent in August from 26.7 per cent a year ago, personal loans growth also moderated to 15.6 per cent in August from 18.2 per cent in August 2018.

In its latest edition of South Asia Economic Focus, the top bank said on Sunday that not all things are gloomy with India.

Government measures to boost growth along with faster resolution of stressed assets, and further transmission of past monetary policy easing are expected to accelerate the country's economic growth the coming quarters, the Reserve Bank of India said.

The only good news came from industrial output growth which jumped to 6.9%, courtesy rise in manufacturing and construction activities. There was a sharp fall in private consumption on the demand side and the weakening of growth in both industry and services on the supply side.

The World Bank's previous projection for India was 7.5%, and this was announced in April.

Likewise, while the rupee initially lost ground against the United States dollars (12.1 per cent depreciation between March and October 2018), it appreciated by about seven per cent up to March 2019, the report said. "The drivers of the deceleration are multiple, mainly domestic and in part long-lasting", Moody's wrote.

While the funding waft would income within the medium term from the hot reduce within the effective corporate tax fee for domestic companies by Finance Minister Nirmala Sitharaman, various financial sector weaknesses would per chance well hinder a immediate amplify.

"It's going to additionally require efforts to comprise fiscal slippages, as higher-than-expected public borrowings might put upward strain on rates of interest and probably crowd-out the personal sector", it stated.

The bank said the main sources of risk included external shocks that result in tighter global financing conditions, and new NBFC defaults triggering a fresh round of financial sector stress. This might most likely well require restoring the health of the financial sector via reforms of public sector banks' governance and a tiresome strengthening of the regulatory framework for NBFCs whereas guaranteeing that solvent NBFCs retain access to sufficient liquidity.



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