INSUBCONTINENT EXCLUSIVE:
has pegged first-quarter GDP growth at 6 per cent in 2019-20 while for the whole fiscal year growth is seen at 6.9 per cent in 2019-20.The
growth numbers for the first quarter are expected to be released by Central Statistics Office (CSO) this week
Ficci said boosting agriculture sector, strengthening MSMEs (micro, small and medium enterprises), undertaking factor market reforms are key
to steering the economy out of the slowdown.Furthermore, the annual median GDP growth forecast for 2019-20 has been pegged at 6.9 per cent,
with a minimum and maximum estimate of 6.7 per cent and 7.2 per cent, respectively
While the median growth forecast for agriculture and allied activities has been put at 2.2 per cent for 2019-20, the industry and services
sector are expected to grow by 6.9 per cent and 8.0 per cent respectively during the current financial year.The survey was conducted during
the months of June-July 2019 among economists from the industry, banking and financial services sectors.With regard to inflation, the latest
official numbers report moderate price levels
The outlook of participating economists on inflation also remains benign
The median forecast for Wholesale Price Index based inflation rate for 2019-20 has been put at 2.9 per cent, with a minimum and maximum
estimate of 2.1 and 5.7 per cent respectively
The Consumer Price Index, on the other hand, has a median forecast of 3.7 per cent for 2019-20 - with a minimum and maximum estimate of 3.4
and 4.1 per cent, respectively.Concerns remain on external front with median current account deficit forecast pegged at 2.3 per cent of GDP
Merchandise exports are expected to grow by 3.6 per cent, while imports are expected to grow by 4 per cent during the year
Overall decline in global growth forecasts, escalating trade tensions, uncertainty around Brexit and foggy outlook on international crude
oil prices have emerged as key concerns on the external front.Slower global growth will impact India's growth prospects as well going
In fact, economists unanimously indicated that India's potential growth rate would be in 7.0 7.5 per cent range, which is lower than the 8
per cent plus potential growth rate estimated until a few years back.However, a majority of participants felt that potential GDP growth
would settle at the higher end of the range at 7.5 per cent
The participating economists were sceptical and divided about replicating the previous high growth performance of over 8 per cent and
sustaining it at that level
Those who were optimistic believed that a turnaround would be challenging given the current global environment and could take at least three
to four years.On the strategies to achieve India's potential growth rate, the surveyed economists suggested four key areas that needed
immediate attention: boosting agriculture sector; strengthening MSMEs; undertaking factor market reforms; and enhancing avenues for
infrastructure financing.The recently released unemployment numbers by NSSO re-affirm the grim situation with regard to employment in the
The participating economists were asked to indicate areas of improvement that would help create more jobs, particularly in manufacturing and
services sectors.The participating economists identified four key areas of improvement that would help create more jobs: cost of doing
business; regulatory reforms; labour reforms and announcement of sector specific special packages.The participating economists opined that
it was necessary to ensure availability of capital and access to diversified long-term capital sources for carrying out productive
investments in the economy
Economists felt that it was necessary for input and more importantly, borrowing costs to be lower to drive investments and employment in the
country.Participants also indicated that it was important to carry out structural reforms in the factor markets and the same has been echoed
Further reforms in areas of land, labour and capital are needed urgently to enhance competitiveness of the Indian industry.Furthermore,
greater efforts are required to develop the bond market, non-banking financial sector, and the stock exchanges
Economists also felt the need for establishing a long-term development finance institution on a priority basis.Sharing their outlook on the
future course of the monetary policy, participating economists unanimously felt that the Reserve Bank of India will continue with its
Majority of them suggested further cut in the repo rate in the remaining part of fiscal 2019
Economists felt that the prevailing real interest rates were high.The participants also signalled that tardy deposit growth is haunting the
banks as it is limiting their ability to lend and is preventing adequate transmission
Economists suggested that the liquidity situation needs to further improve for ensuring smooth transmission of the cuts in repo
rate.Further, it has been observed that the saving rate in India has declined over the past few years, with the decline being sharper in the
This is a major concern as household savings form a very important source of funds for investment in the economy
Intermediation of savings into financial assets has also been a challenge
Economists were asked to suggest ways in which financialization of household savings in India could be improved.Economists attributed the
dip in net household savings to lower overall incomes in the hands of the consumer on back of slowdown in economic growth
They emphasized the need for enhancing GDP growth and ensuring a more equitable distribution of gains from growth to improve the savings
rate.Economists also underscored the importance of improving penetration of financial products to improve financialization of savings
While commending the government for opening mass bank accounts under Pradhan Manti Jan Dhan Yojana, participants said they believed that
innovative approaches such as focussing on promoting digital banking need to be undertaken more aggressively to bridge the gap in access and
usage of bank accounts.Surveyed economists recommended that financial instruments offered by equity and bond markets should play a major
role in diversifying the available saving options
Furthermore, from a regulatory standpoint; the government bond market, the corporate bond market and the equity market are treated
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