The slowdown has already resulted in a slew of counter-cyclical measures being adopted by the government, and also cumulative rate cuts of 1.35 per cent by RBI till the inflation started surging.
The government’s official GDP growth estimate at 5 per cent is optimistic, analysts said on Wednesday, pegging the critical number to go down till 4.6 per cent for the fiscal. The estimates, including house economists at the state-run largest lender SBI, come a day after the government conceded that GDP growth will slip to a 11-year low of 5 per cent in its advance estimates.
The slowdown has already resulted in a slew of counter-cyclical measures being adopted by the government, and also cumulative rate cuts of 1.35 per cent by RBI till the inflation started surging. Economists at SBI pegged the real GDP growth at 4.6 per cent, much lower than the government estimate and added that the nominal growth of the economy will come at 7.5 per cent, a 42-year-low.
“We are now revising our GDP projection for FY20 to 4.6 per cent based on current available trends,” they said in a note pencilled after the release of the government estimate. It seemed to suggest that the root cause of the difficulties on the growth is faultering consumption, and added that we will have to wait till the second half of the next fiscal for the recovery.
Japanese brokerage Nomura said it expects the FY20 growth to come at 4.7 per cent and improve to 5.7 per cent for FY21, and blamed the below consensus estimates on the ‘triple balance sheet’ problem which has afflicted corporates, banks and non-bank lenders.
Domestic brokerage Kotak Securities also expects growth to come at 4.7 per cent. “Our estimate is lower than the NSO’s (National Statistical Organisation) estimates since we are less optimistic about the prospects about a recovery in the manufacturing segment,” it said.
It said the NSO’s estimates on impact of corporate tax cut, electricity, financial services and real estate, and trade, hotels, transport and communication are “optimistic”. Private sector lender Yes Bank said it is sticking to its estimate of 4.9 per cent real GDP growth in FY20.