Govt Pegs FY20 GDP Growth at 5%

India’s economy is forecast to grow 5% this fiscal, its slowest pace in 11 years, estimates released by the government showed, increasing pressure on finance minister Nirmala Sitharaman to announce measures to revive demand and boost investments in the upcoming budget.

The projected growth rate of gross domestic product in FY20 is the lowest since FY09, the year of the global financial crisis, when GDP grew 3.1%.

It reflects a sharp decline from 6.8% in FY19 as the economy is hit by a broad-based slowdown, fragile consumer sentiment and stagnant investments.

The first advance estimates released by the National Statistical Office suggest a tepid recovery in second half of the fiscal with implied growth at 5.2% against 4.8% recorded in the first half for an overall 5% rise in GDP.

The CSO estimate is in line with the Reserve Bank of India’s projection of 5% growth and substantially lower than the 7% given by the Economic Survey for FY20. Gross value added growth is seen at 4.9% against 6.6% in FY19.

Nominal GDP growth, without adjusting for prices, is estimated at 7.5% — a 42-year low according to SBI — well below the 11.2% recorded in FY19, which suggests muted corporate performance and subdued tax collections, and will add to fiscal pressure.

No comments: