Amid concerns on slowdown, IMF (International Monetary Fund) said that India’s economic growth is ‘much weaker’ than expected owing to a host of factors including uncertainty in the corporate and environmental regulations. It comes at a time when the country’s GDP recorded a dismal 5 per cent growth in the first quarter of FY20, mainly on account of weakness in the manufacturing sector. The growth stands at a six-year low with the previous low posted at 4.3 per cent in March 2013. “Again, we will have a fresh set of numbers coming up, but the recent economic growth in India is much weaker than expected, mainly due to corporate and environmental regulatory uncertainty and lingering weakness in some non-bank financial companies and risks to the outlook are tilted to the downside, as we like to say,” IMF spokesman Gerry Rice said on Thursday.
The IMF has reduced its projection for India’s economic growth by 0.3 percentage points to 7 per cent for the fiscal year 2019-20. Even as the domestic consumption sees muted growth for sometime now, the private sector has asked for a stimulus package from the Modi government to boost it. Finance Minister Nirmala Sitharaman has even announced a slew of reforms to provide support to the sluggish economy.
Meanwhile, former Prime Minister Manmohan Singh said in an interview to a Hindi daily that demonetisation and hastily implemented GST (goods and services tax) are the key reasons behind the ongoing slowdown. The eminent economist also said that the GST was introduced at a time when the economy was already recovering from the negative effects of the demonetisation and this hit the economy. Several leading brokerages have also revised their projections on India’s growth for FY20 downwards.
Source : Financial Express