The continuing decline in growth rate is anticipated for the sixth consecutive quarter of July-September, 2019. India Ratings and Research has released a report in this regard.
New Delhi: The continuation of the ongoing decline in the country’s economic growth rate is estimated to continue for the sixth consecutive quarter in July-September, 2019. India Ratings and Research, in its assessment report on Tuesday, further lowered the GDP growth estimate for the fourth time for the current financial year and this time it is projected to be 4.7 percent in the July-September quarter.
According to government figures, the growth was 5 percent in the first quarter of 2019-20. This was the lowest economic growth rate in any quarter after 2013. India Ratings has reported a growth rate of 4.7 percent in the second quarter of the current financial year. If this happens, it will be the sixth consecutive quarter after 2012 when the GDP growth rate will decline.
This estimate has come after the government has taken several fiscal stimulus measures, including company tax cuts. “India Ratings and Research has revised the GDP growth estimate for 2019-20 to 5.6 percent,” the rating agency said in a statement. This is the fourth time in a row that the rating agency has lowered its economic growth forecast for the current financial year. A month earlier, the agency had estimated it to be 6.1 percent.
According to the statement, review of the data was necessary as the high frequency data suggests that the earlier estimate of growth rate of more than 5 percent in the second quarter of FY 2019-20 will not be retained. According to the new estimate, it may be 4.7 percent in the second quarter of the current financial year. The second quarter data is expected to be released on Friday.
India Ratings said, “The decline in growth momentum despite favorable comparative impact indicates that the economic growth rate in the second half of 2019-20 may be weaker than earlier estimates and is expected to be 6.2 percent”. According to the statement, the country’s economic scenario has weakened further this year. The problem started with non-banking financial companies and was gradually affected by retail companies, auto companies, house sales and heavy industries.
The growth estimate of India Ratings is below the revised outlook of Moody’s Investors Service by 5.8 percent. This is the situation when the Modi government has taken steps to halt the economic growth. In September, the government reduced the company tax rate from 30 percent to 22 percent.
Also, the company reduced the income tax rate to 15 percent for new companies engaged in manufacturing work. Apart from this, infusion of capital in banks, merger of 10 public sector banks into four, expenditure in infrastructure sector and tax benefits for startups were also given.