Another quarter with below 5% GDP growth, or will RBI, govt measures pay-off?

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Published: February 26, 2020 11:33:42 AM

With leading economic indicators seeing no significant improvement, GDP growth for Q3FY20 is expected to be under 5 per cent, analysts said.

In an unprecedented fifth downward revision of its GDP forecasts for FY20, Ind-Ra had pegged it at 5.0% in January 2020 from 7.5% a year ago. Despite the government and RBI announcing a slew of measures to boost growth, the economy is seeing a limited impact, a report by CARE Ratings said.

With leading economic indicators seeing no significant improvement, GDP growth for Q3FY20 is expected to be under 5 per cent, analysts said. Despite the government and RBI announcing a slew of measures to boost growth, the economy is seeing a limited impact, a report by CARE Ratings said. The GDP growth is expected to be at 4.5 per cent and GVA growth at 4.3 per cent in Q3FY20, the report added. The government is scheduled to release official GDP growth data for the December-ended quarter on February 28, 2020. The Indian economy grew at a 6-year low of 4.5 per cent in Q3FY20. According to a Reuters poll of economists, the GDP may be recorded at 4.7 percent in the last quarter of 2019.

“With the liquidity conditions in the economy having improved,  albeit marginally, coupled with robust growth in deposits is likely to improve growth in the financial services segment. However,  subdued bank credit -growth continuing is likely to weigh on the growth of this segment”, the report also said. The mining and quarrying, manufacturing and construction sectors are expected to see negative growth, CARE Ratings also said. The mining and quarrying, manufacturing and construction sectors are expected to see negative growth.

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The government had announced a number of measures to boost the economy in budget 2020. Since February 2019, the RBI has cut policy rates by 135 bps. Meanwhile, the economy is seeing a slowdown for some time now. The slowdown is both on account of both domestic and global factors. According to the first GDP advance estimates, the economy is expected to grow at a mere 5 per cent in FY20.

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