Seems the gloomy scenario around Indian economy is expanding with every passing day!
As the latest reports say, the country’s growth forecasts for the last quarter, that ended in September, are below 5% at 4.2-4.7%.
This growth of 4.2% is the lowest since 2012, the year ‘new base year’ for GDP was adopted.
Economists at State Bank of India, Nomura Holdings Inc. and Capital Economics Ltd. have reportedly lowered their growth forecasts to this level and the government is expected to publish the data on November 29, 2019.
“We now believe GDP growth did not bottom in. High-frequency indicators have plunged and domestic credit conditions remain tight amid weak global demand,” says Sonal Varma, chief economist for India and Asia at Nomura in Singapore.
While RBI has cut interest rates five times so far in this year, the December month is going to see larger cuts again.
RBI has cut interest rates five times so far in this year, the December month is going to see larger cuts again.
“We now expect larger rate cuts from RBI in December. However, such rate cut is unlikely to lead to any immediate material revival,” says Soumya Kanti Ghosh, chief economic adviser at State Bank in Mumbai.
Meanwhile, former PM and economist Manmohan Singh termed the current situation of Indian economy as “a perilous state of fear, distrust and lack of confidence”.
He stated that India’s GDP has fallen from 8% in the Q2 of 2018 to a 6-year-low of 5% by Q2 of 2019, adding that the forecasts by SBI shows it would be as weak as 4.2% soon.
“The Modi government seems to view everyone and everything through a tainted prism of suspicion and mistrust. Every policy of previous governments are presumed to be of bad intent; every loan sanctioned considered undeserving; and every new industrial project deemed to be crony in nature,” reads Manmohan’s statement.
Chief executive of a renowned investing firm goes with Manmohan’s idea stating that it has been widely shared across political and business circles, while a few are refraining from doing so.
“The fact is that there is an economic clean-up under way, where crony capitalists of the decades gone by are finding that their business models have been disrupted. Where the debate lies is whether the patient will survive the clean-up or whether the detox will be too much pain for the Indian economy to bear,” says Saurabh Mukherjea, chief executive of Marcellus Investment Managers.
Let’s see what the government has to say on this!
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