FY 19-20 has been a difficult year for Indian economy with GDP growth falling below 5% in a decade. IMF’s chief economist Gita Gopinath remarked “owing to stressed NBFC sector & weak rural demand” India’s slowing growth drags the world.
On Monday 20th January, IMF has cut the growth forecasts for FY 19-20 by another 1.3 percentage points to 4.8%.
GDP growth trend for India
In order to understand the numbers mentioned above, following graph will be helpful. It shows how Annual GDP growth has fared in India since FY 04-05. We have sourced the numbers from Wikipedia & government websites.
You may observe that over the last few years, Indian economy has been slowing continuously starting from 2016.
NBFC crisis starting form IL & FS default is one of major reasons which triggered the economic dampening. Demonetization, GST tax regime implementation & weakening of rural consumption has further accelerated the decline.
As per the latest estimates from Reserve Bank of India, economy is expected to grow at 5% in FY 19-20. On the other hand, Moody’s investor service has projected a 4.9% growth for India in this fiscal.
India’s slowing growth drags the world – WEO
In the world economic outlook update, IMF downgraded the world economic growth prospects by 0.1 percentage points. The world economy is estimated to grow at 3.3% in 2020 and 3.4% in 2021. The downward revision is largely attributed to India’s slowing growth which drags the world.
What do you think should be done to improve the growth prospects in India? Do you think this is a structural slowdown or a cyclical process?
Stay tuned as we explore the answers in stories coming forward.
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