Amid looming concerns surrounding thedismal economic state of the country, the Asian Development Bank (ADB), on 11December, trimmed its forecast for India¡¯s economic growth in 2019-20 to 5.1per cent saying consumption was affected by slow job growth and rural distressaggravated by poor harvest.
In September, ADB forecast India¡¯s GDP to grow 6.5 per cent in 2019-20and 7.2 percent in the year thereafter.
¡°India¡¯s growth is now seen at a slower 5.1 per cent in fiscal year2019-20 as the foundering of a major non-banking financial company in 2018 ledto a rise in risk aversion in the financial sector and a credit crunch.¡±
¡°Also, consumption was affected by slow job growth and rural distressaggravated by a poor harvest,¡± it said.
ADB said growth should pick up to 6.5 per cent in the next fiscal yearwith supportive policies.
Recently, former Reserve Bank of India (RBI) governor Raghuram Rajansaid India is in the midst of a "growth recession" with signs of deepmalaise in the Indian economy that is being run through extreme centralisationof power in Prime Minister's Office and powerless ministers.?
Writing down his recommendations to help the ailing Indian economy outof the ongoing slowdown in the India Today magazine, he called forreforms to liberalise capital, land and labour markets, and spur investment aswell as growth.
"To understand what has gone wrong, we need to start first withthe centralised nature of the current government. Not just decision-making butalso ideas and plans emanate from a small set of personalities around the PrimeMinister and in the Prime Minister's Office (PMO).
"That works well for the party's political and social agenda,which is well laid out, and where all these individuals have domain expertise.It works less well for economic reforms, where there is less of a coherentarticulated agenda at the top, and less domain knowledge of how the economyworks at the national rather than state level," Rajan wrote.
According to a SBI report, the second quarter GDP growth may furtherlower down to 4.2 per cent on low automobile sales, deceleration in air trafficmovements, flattening of core sector growth and declining investment inconstruction and infrastructure, and the growth forecast for FY20 has now comedown to 5 per cent from 6.1 per cent earlier.
State Bank of India (SBI) joins all other global agencies -- the ADB,World Bank, OECD, RBI and the IMF -- in downgrading India's FY20 growth rates.
"Based on our composite leading indicator that suggests the GDPgrowth to slow down further from 5.0 per cent in Q1 of FY20 to 4.2 per cent onaccount of low automobile sales, deceleration in air traffic movements,flattening of core sector growth and declining investment in construction andinfrastructure", the bank said in a report.
India's GDP was already at the 6-year lowest of 5 per cent in Q1.