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India Ratings downs GDP forecast to 6.7% for FY’20

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On August 28, 2019, the rating agency India Ratings & Research (Ind-Ra)downgraded India’s GDP (Gross Domestic Product) growth to a six year low of 6.7% for FY20  (Fiscal year 2020) compared to its previous estimate of 7.3%. This downgrade is due to weak consumption demand, monsoon and slowdown in manufacturing growth.India Ratings downs GDP forecast to 6.7% for FY'20

Key points
i. This rating comes days after rating agency Moody’s revised the GDP growth rate to 6.2% from previous 6.8% estimation for the year 2019.
ii. Slowed growth: FY20 will also be the 3rd consecutive year of subdued growth(depressed growth) involving factors such as slowed consumption demand, uneven monsoon, inability to resolve cases in a time bound manner by Insolvency and Bankruptcy Code(IBC) and is also expected to have adverse impacts on imports. The first quarter of FY20 is expected to be the 5th consecutive quarter of declining GDP growth at 5.7 per cent.
iii. Other factors of Slowed growth: Private consumption, sluggish private corporate investment, the stress in real estate & manufacturing sector’s constant 70-76% range.
iv. Inflation based index: Food and crude oil prices are currently benign (gentle) and the wholesale price index(WPI) and Consumer Price Index (CPI) is expected to remain moderate at 3.2% and 3.8% respectively, in FY20.
v. CAD: The Current Account Deficit (CAD) is expected to decline to 1.9% of GDP in FY20 from 2.1% of GDP in FY19. The report also states that achieving the FY20 fiscal deficit target of 3.3% wouldn’t be a difficulty in view of the transfer of Rs.1.76 trillion to the government by the Reserve bank of India(RBI).

About (Ind-Ra):
Ind-Ra is a 100% owned subsidiary of the Fitch Group.
Managing Director(MD) & Chief Executive Officer(CEO)- Rohit karan Sawhney(Since 2017).