New Delhi: India’s economy probably expanded at its weakest pace in more than six years in the quarter to September, a Reuters poll showed, as consumer demand and private investment weakened further and a global slowdown hit exports.
The median of a poll of economists showed annual growth in gross domestic product of 4.7 per cent in the quarter, down from 5.0 per cent in the previous three months and 7 per cent for the corresponding period of 2018.
Economic growth could dip to around 4 per cent in the September quarter, two domestic television channels said Wednesday, citing government sources.
If the latest figure for expansion of gross domestic product INGDPQ=ECI is 4.7 per cent or less, the quarter will have registered the slowest expansion in 26 quarters, since 4.3 per cent in January-March 2013. The Narendra Modi government has taken several steps, including cutting corporate tax in September, to boost investments and bolster economic growth.
Economists in a Reuters poll predicted the Reserve Bank of India would cut its repo rate INREPO=ECI for the sixth time in a row, by 25 basis points, to 4.90 per cent at its December 3-5 meeting.
“Agrarian distress and dismal income growth so far, coupled with subdued income growth expectation in urban areas, have weakened consumption demand considerably,” said Devindra Pant, chief economist at Fitch arm India Ratings & Research. “Even the festive demand has failed to revive it,” he said, citing data on non-food credit, auto sales and select fast moving consumer goods. “ECONOMIC EMERGENCY”
In a heated parliamentary debate on the economic slowdown affecting jobs, Wednesday, the opposition parties said millions of people had lost their jobs and the country faced an “economic emergency”.
In her reply, Finance Minister Nirmala Sitharaman said the economy faced a slowdown but no “recession” and cited several government measures to support economic growth.
Thursday, Sitharaman sought parliament’s approval to spend $2.7 billion in addition to a budgeted 27.86 trillion rupees ($388 billion) in the 2019/20 fiscal year.
Economists said with persistently tight domestic credit and weak corporate profits, India’s recovery could be delayed and the pick-up would remain below potential. India needs to grow at around 8 per cent to create enough jobs for its millions of young people joining the labor force each year.
The unemployment rate in October rose to 8.5 per cent, its highest since August 2016, according to the Centre for Monitoring Indian Economy (CMIE), though the government estimates that urban unemployment declined.
