While the GDP quarterly results for the second quarter of the current fiscal year is at the door, various rating agencies have estimated a further downfall in the economy. Despite Finance Minister Nirmala Sitharaman’s announcement of a slew of fiscal measures to revive the ailing economy, they did not succeed to bring back the lost momentum in demand and consumption in the near-term. The slowdown in all quarters of the economy has led to a sharp decline in India’s growth forecast in the last two quarters. The Indian economy may show a consecutive fall in growth for the fifth consecutive quarter in a row. India’s GDP expanded 5 per cent in April-June, which was the slowest annual pace since 2013.

Rating agency ICRA expects India’s growth rate to further decline to 4.7 per cent in the second quarter. The agency has blamed subdued domestic demand and weak investment activity for the downward revision. Even India Ratings’ estimate is in-line with ICRA at 4.7 per cent. This is the fourth revision by the agency and was driven by the pessimistic high-frequency indicators.

On the other side, India’s largest bank SBI has revised down the second-quarter growth to a mere 4.2 per cent on account of low automobile sales, deceleration in air traffic movement, slow core sector growth and declining investment in construction and infrastructure.

The Narendra Modi-led government announced measures such as bank recapitalisation, the mergers of 10 PSU banks into four, aid for the auto sector, new infrastructure spending plans,, tax benefits for startups, reduction in corporate tax, etc. However, these measures are yet to show their results in the coming quarters. Also, these measures are likely to adversely affect the government’s revenue but any change in the borrowing plans in the second half of the current fiscal year is not announced yet. 

Source : Financial Express