Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
2-min read

SBI Research Report Cuts India's GDP Forecast for This Fiscal to 5% from Earlier Projection of 6.1%

The report, however, said the growth rate will pick up pace in 2020-21 to 6.2%. To propel economic growth, it said, the Reserve Bank of India (RBI) may go for "larger rate cuts" in December monetary policy review.

PTI

Updated:November 12, 2019, 6:04 PM IST
facebookTwitter Pocket whatsapp
SBI Research Report Cuts India's GDP Forecast for This Fiscal to 5% from Earlier Projection of 6.1%
News18 creative.

New Delhi: An SBI research report on Tuesday sharply cut the country's GDP growth forecast to 5% for FY 2019-20 from the earlier projection of 6.1%.

The second quarter GDP growth rate is likely to slip to 4.2% on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure, according to Ecowrap — the report from the Economic Research Department of State Bank of India (SBI).

The report, however, said the economic growth rate will pick up pace in 2020-21 to 6.2%. To propel economic growth, it said, the Reserve Bank of India (RBI) may go for "larger rate cuts" in December monetary policy review.

Last month, while reducing the key policy rate (repo) by 25 basis points for the fifth time in a row, the RBI had also reduced its growth forecast to 6.1 per cent for 2019-20 from 6.9 per cent.

Meanwhile, the SBI research report said, "We are revising our GDP forecast for 2019-20 to 5 per cent from 6.1 per cent earlier." India's GDP growth had dipped to about a six-year low of 5 per cent in the first quarter of the fiscal.

"We expect Q2GDP growth at 4.2 per cent. Our acceleration rate for 33 leading indicators at 85 per cent in October 2018 is down to just 17 per cent in September 2019, with such decline gaining traction from March 2019," the report said, while terming the decline in September IIP by 4.3 per cent as "quite alarming".

Ecowrap further said that the growth rate in 2019-20 "should be looked" through the prism of synchronised global slowdown (countries have witnessed 22-716 basis point decline between June 2018 and June 2019, and India cannot be isolated!).

"India is also significantly lower in Economic Uncertainty Index when compared globally! We also believe that Moody's change in outlook from stable to negative will not have any significant impact as rating actions are always a laggard indicator and the markets this time have categorically given a thumbs down to such," the report said.

According to the study, the RBI is expected to go in for "larger rate cuts" in December monetary policy review. The RBI is scheduled to announce its fifth bi-monthly monetary policy for the current fiscal on December 5.

"We now expect larger rate cuts from RBI in December policy. However, such rate cut is unlikely to lead to any immediate material revival, rather it might result in potential financial instability as debt financed consumption against an increasing household leverage had not worked in countries and India cannot be an exception," the report said.

The contemporary issue for macroeconomists is to focus on assuring adequate aggregate demand and the role of fiscal policy in this context is of paramount importance, it added.

"In essence", markets are not unduly worried about fiscal deficit and await clarity from Government on the extent of fiscal slippage in current fiscal, the report noted. Such an announcement could in fact be good for the markets, Ecowrap said.

Against growth slowdown, Ecowrap suggested that "it is imperative that India adheres to no negative policy surprises" in sectors like telecom, power and NBFCs. For example, it is imperative that a lasting solution is worked out for the NBFC sector that has been much delayed now, it said.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Read full article
Next Story
Next Story

facebookTwitter Pocket whatsapp
Most Active
Company Price Change %Gain
Yes Bank 56.00 -9.82
SBI 320.00 -4.82
ICICI Bank 524.80 -0.62
Indiabulls Hsg 272.45 -4.44
Reliance 1,554.90 0.26
Company Price Change %Gain
Yes Bank 56.00 -9.82
Indiabulls Hsg 272.40 -4.39
SBI 319.80 -4.89
Reliance 1,554.95 0.30
RBL Bank 338.80 -7.28
Top Gainers
Company Price Change %Gain
Bharti Infratel 259.70 5.55
Kotak Mahindra 1,674.30 1.52
JSW Steel 254.10 1.05
Tata Steel 403.25 0.86
Dr Reddys Labs 2,890.80 0.67
Company Price Change %Gain
Kotak Mahindra 1,674.30 1.48
Tata Steel 402.95 0.83
Reliance 1,554.95 0.30
Asian Paints 1,717.35 0.15
Infosys 715.15 0.07
Top Losers
Company Price Change %Gain
Yes Bank 56.00 -9.82
SBI 320.00 -4.82
Zee Entertain 287.70 -4.12
GAIL 117.15 -3.34
IndusInd Bank 1,465.85 -2.91
Company Price Change %Gain
Yes Bank 56.00 -9.82
SBI 319.80 -4.89
IndusInd Bank 1,463.75 -3.05
Tata Motors 161.50 -2.77
M&M 510.30 -2.73

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results