‘India’s GDP growth would be even better if global factors did not play spoilsport’

‘India’s GDP growth would be even better if global factors did not play spoilsport’
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New Delhi, Jan 17: India’s GDP growth is expected to be a tad higher at 7.5% in the financial year 2019-20 compared with 7.2% in the financial year 2018-19. The growth, however, would be more dispersed and balanced across sectors, said India Ratings and Research (Ind-Ra), the Indian arm of Fitch group, on Thursday.
According to the rating agency, the FY19 GDP growth would have been even better if global factors such as higher crude oil prices and strong US dollar had not played spoilsport. Further, Fitch said that hiccups faced on the domestic turf such as frequent revisions in GST rates, NBFC liquidity issue post IL&FS debt crisis and slow progress on Insolvency and Bankruptcy Code cases, among others, also hurt.
Post demonetisation and GST implementation, the rating agency had expected the ongoing financial year to be a year of quick recovery. “… indeed the recovery has been sharp with GDP growth coming in at 7.2% (FY18: 6.7%),” (Ind-Ra) said.
Recently, Central Statistics Office (CSO) data showed that India’s GDP is expected to grow at 7.2 per cent in FY19 as against 6.7 per cent on-year. The World Bank has also projected India’s GDP to grow at 7.3 per cent in the fiscal year 2018-19, and 7.5 per cent in the following two years.
On the fiscal front, Ind-Ra said that the slippage on the fiscal front look imminent with fiscal deficit rising to 3.5% of GDP in FY19 compared with budgeted 3.3%.
The retail and wholesale inflation is also expected to average 3.4% and 4.3%, respectively, in FY20 (FY19: 4.9% and 3.5%), the rating agency said, adding that this may prompt the RBI to change its policy stance to neutral from calibrated tightening in the forthcoming February 2019 monetary review.
Earlier this week, the government released the official data and said that the Consumer Price Index (CPI) inflation in December dropped to an 18-month low of 2.19 per cent versus 2.33 per cent in November amid sliding prices of fruits, vegetables and fuel. WPI-based inflation also fell to an 8-month low in December falling to 3.80 per cent from 4.64 per cent in November amid a decline in fuel and food items.