Monday, 30th October 2017

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Forecast of sub 5% growth

Latest GDP data for July-September showed a significant moderation in the pace of economic growth to 4.5 per cent

By PTI in New Delhi
  • Published 9.12.19, 1:14 AM
  • Updated 9.12.19, 1:14 AM
  • a min read
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In response to the growth slowdown, the RBI has eased policy rates significantly during 2019, with a series of rate cuts since February, while the government announced a large reduction in corporate tax rates in September to help boost new investment spending. (Shutterstock)

India’s real GDP growth in 2019-20 fiscal is expected to be slightly below 5 per cent as the impact of stimulus measures will take time to filter through to the economy, IHS Markit has said.

Latest GDP data for July-September quarter showed a significant moderation in the pace of economic growth to 4.5 per cent, the weakest in six years with a key contributory factor being a slump in manufacturing output. This compared with the 5 per cent growth rate registered in the previous quarter and 7 per cent rate recorded a year ago in the September quarter of 2018.

For the first half of 2019-20 fiscal, GDP growth slowed to a pace of 4.8 per cent compared to 7.5 per cent a year back.

“Following the weak GDP outturn for the September quarter, Indian real GDP growth in FY 2019-20 is expected to be slightly below 5 per cent as it is anticipated that the impact of stimulus measures will take time to filter through to the real economy,” IHS said in a report.

“Financial sector fragilities continue to weigh on India’s economic growth momentum, with the high level of non-performing loans on the balance sheets of the public sector banks, constraining their new lending,” IHS added.

Further, there are risks from potential contagion effects from troubled non-bank financial companies to the balance sheets of some commercial banks, which could weigh on the overall pace of credit expansion. In response to the growth slowdown, the RBI has eased policy rates significantly during 2019, with a series of rate cuts since February, while the government announced a large reduction in corporate tax rates in September to help boost new investment spending.