INSUBCONTINENT EXCLUSIVE:
India's longest growth slump since 2012 is heightening concern that it may be tough for policy makers to reverse the slowdown."Growth has
now slipped below the long term trend of 6.6 per cent for two consecutive quarters, which implies that India is effectively in a
quasi-recession," Teresa John, an economist at Nirmal Bang Equities Pvt
in Mumbai, said in a report published Tuesday
Early indicators suggest "growth remains elusive," she added.While the standard macroeconomic definition of a recession is two consecutive
quarters of shrinking GDP, a significant decline in economic activity spread across months is another often-used description
In India, which offers only year-on-year calculations of output, automobile sales have plunged the most in two decades and the chairman of
warned that the consumer goods his company makes are "recession-resistant, but not recession-proof."Official data on Friday showed that
gross domestic product in Asia's No
3 economy grew 5 per cent in April-June from a year earlier, below the weakest estimate of 39 economists polled by Bloomberg and the slowest
The five straight quarters of slowing growth mark the longest slump since 2012
Under the hood, the numbers offer more cause for concern on whether output - once adjusted for inflation -- will increase fast enough to
ensure borrowers cover their interest payments.A Bloomberg gauge of high-frequency indicators suggests that economic activity continued to
weaken in July, with investment and consumption both falling
Economists at Nirmal Bang expect GDP growth to bottom out in the quarter ending September but believe that "a counter-cyclical government
spending boost is required."Room to do that is limited
The government is targeting a budget deficit of 3.3 per cent of gross domestic product in the financial year through March 2020, but total
public sector borrowing, which includes those by regional governments and state-owned companies, is estimated at more than 8 per cent of
GDP.Monetary policy may have to bear the burden
Elsewhere, Barclays Plc forecast an additional 65-basis-point decrease by the end of this year and Kotak Mahindra Bank estimated a 75-point
reduction will come from the RBI.Get Breaking news, live coverage, and Latest News from India and around the world on
TheIndianSubcontinent.com
Catch all the Live TV action on TheIndianSubcontinent 24x7 and TheIndianSubcontinent India
Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.
