India Rating and Research is another Ratings Agency that has lowered India’s GDP outlook after Moody’s Ratings. After witnessing the slowest growth of India in April-June since 2013, Fitch firm India-Ra revised India’s FY20 GDP growth estimate to 5.6%.
Crux of the Matter
The expected GDP growth for the 2nd Quarter of FY20 is 4.7%, trailing slowdown for 6 consecutive months, a first in the last 7 years.
Even achieving 5.6% would require heavy lifting from the government, said India-Ra. Government spending picked up in the second quarter of FY20 and is expected to continue rising in the second half of the fiscal year.
Corporate Tax Rate Cut, Bank recapitalizations, bank mergers, auto sector support, infrastructure expenditure, etc. have been the government’s steps to stable India’s wobbling economy.
India-Ra believes that if India cuts down on its expenditure to meet the Current Account Deficit targets then its growth is likely to be around or lower than 5.6%.
Curiopedia
India’s Current Account Deficit – Since independence, India’s balance of payments on its current account has been negative. Since economic liberalisation in the 1990s, precipitated by a balance-of-payment crisis, India’s exports rose consistently, covering 80.3% of its imports in 2002–03, up from 66.2% in 1990–91. India’s growing oil import bill is seen as the main driver behind the large current account deficit, which rose to $118.7 billion, or 11.11% of GDP, in 2008–09. Between January and October 2010, India imported $82.1 billion worth of crude oil. More Info
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