After dismal Q1, CRISIL cuts India’s GDP growth to 6.3% in FY20; here are key concerns

By: |
Updated: September 4, 2019 7:31:48 PM

After registering the slowest growth in the last six years, global rating agency CRISIL has cut India’s GDP growth to 6.3% in FY20.

GDP growth, Reserve Bank of India, CEII, GDP dynamics, key economic indicatorsThe ‘Mining and Quarrying’, ‘Construction’ and ‘Financial, Real Estate and Professional Services’ grew at 2.7 per cent, 5.7 per cent and 5.9 per cent, respectively, during this given period.

After registering the slowest growth in the last six years, global rating agency CRISIL has cut India’s GDP growth to 6.3% in FY20. The global rating agency said that a growth of 5 per cent in the first quarter of the ongoing fiscal corroborates that India’s economic slowdown is deeper and more broad-based than suspected. “A plunge in domestic private consumption demand, slump in manufacturing, halving of merchandise exports growth, and a high-base effect from last year have gnawed away at first-quarter growth,” CRISIL said in a report released Wednesday.

While the manufacturing sector grew at just 0.6 per cent while ‘Agriculture, Forestry and Fishing’ sector grew at 2 per cent. The ‘Mining and Quarrying’, ‘Construction’ and ‘Financial, Real Estate and Professional Services’ grew at 2.7 per cent, 5.7 per cent and 5.9 per cent, respectively, during this given period. Even the RBI had lowered its outlook for the FY20 at its August meeting.

“Private consumption growth – the bulwark of India’s growth story in recent years – registered a scant 3.1% in the first quarter, a four-year low. The last couple of times private consumption fell this sharply was in the first quarter of fiscal 2013 (-0.9%) and third quarter of fiscal 2015 (2.1%), as per the new GDP series,” CRISIL also said.

Also read: Modi govt signs 26 advance pricing agreements; software, BPO, engineering services sectors to benefit

“In the past few years, households had dipped into their savings and leveraged themselves to support private consumption. However, first quarter data shows, they have not been able to sustain the momentum,” it also said in the report.

Various other global brokerages including Nomura, DBS, among others have cut India’s growth forecast for the ongoing fiscal.

Meanwhile, cement demand growth is expected to halve to around 5 to 5.5 per cent this fiscal, impacted by weak government spending in first half and liquidity crunch faced by the real estate market, CRISIL also said.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1GST frauds on rise: GST Council to take urgent measures to curb fraudulent tax evasion
2Modi’s Russia visit: Trade and economy on agenda; key things to know
3India’s services sector activity eases in August amid softer rise in new business orders: PMI