After CRISL cutting down India’s GDP growth estimate to 6.9 per cent, India’s GDP growth is likely to be 6.2 per cent during the current fiscal, down from 6.8 per cent in 2018-19, on account of flat growth in agriculture sector, economic think-tank National Council of Applied Economic Research (NCAER) said.
The prospects for agricultural sector in 2019-20 depend largely on the south-west monsoon, it said in a statement. As of August 5, 2019, out of a total number of 36 agro-meteorological sub-divisions in the country, three have received excess rainfall, 21 get normal rainfall, while the remaining 12 sub-divisions were rain deficient. And the country as a whole has received 7 per cent below normal rainfall by August 5, 2019. It has also experienced temporal variations in rainfall.
“The forecast as per the annual model is that GDP at market prices will grow at 6.2 per cent and Gross Value Added (GVA) at basic prices at 6 per cent for 2019-20 on a year-on-year (y-o-y) basis. The forecast as per the quarterly model is that GVA will grow at 6.2 per cent on a y-o-y basis,” NCAER said.
In 2019-20, it further said, the real agriculture GVA is envisaged to grow at zero per cent, real industry GVA at 6.1 per cent, and real services at 0.81 % GVA at 6.9 per cent. The Wholesale Price Index (WPI) inflation is projected at 2.6 per cent.
As per the NCAER, the growth rates in exports and imports, in dollar terms, are estimated at 4.4 per cent and 3.3 per cent, respectively. The current account balance and central fiscal deficit, as percentages of GDP, are projected at (-) 0.6 per cent and 3.5 per cent, respectively.
Meanwhile, considering the existing slump in demand and a definite slowdown in the economy, the Reserve Bank of India (RBI) has cut repo rate for fourth time this year as benign inflation provides the central bank room to help an economy that is growing at its slowest in nearly five years.
The RBI’s monetary policy committee, led by governor Shaktikanta Das, lowered repo rate by 35% basis points to 5.4%. The reverse repo rate was reduced to 5.15%. In the earlier three policies, RBI had reduced repo rate by 25 basis points each. The RBI also lowered the GDP growth rate for 2019-20 lower to 6.9%, as compared to earlier estimate of 7%.