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.
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.
“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.