Growth in India May Slow Down To 5% In 2019-2020: World Bank
The World Bank, in its latest edition of Global Economic Prospects, has projected a five per cent growth rate for India in the 2019-2020 fiscal, but said it was likely to recover to 5.8 per cent in the following financial year. Experts say that with the global situation being no better, authorities must focus on improving the business climate, as well as concentrating on law, debt management, productivity and steps to ensure sustained growth.
"Growth in India is projected to decelerate to five per cent in FY (financial year) 2019/20 amid enduring financial sector issues. Key risks to the outlook include a sharper-than-expected slowdown in major economies, a re-escalation of regional geopolitical tensions and a setback in reforms to address impaired balance sheets in the financial and corporate sectors," the report said.
"In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to five per cent in fiscal year 2019/20, which ends March 31 and recover to 5.8 per cent the following fiscal year," the World Bank said on January 8, 2020.
The global economic growth forecast indicates about 2.5 per cent growth, thanks to the recovery, post an investment and trade downturn last year. However, it doesn’t negate the risk either. The United States may see some lull, with the growth forecast at 1.8 per cent this year, borne out of tariff increases. Europe too may see a gloomy scenario, with one per cent growth projected in 2020, the World Bank said.
"With the growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," World Bank Group vice-president for equitable growth, finance and institutions, Ceyla Pazarbasioglu, said.
As for India, much of the dampener comes from the non-banking sector, where credit conditions have been tightened and domestic demand has reduced. In South Asia, regional growth may see better days ahead in 2022, with growth projected at six per cent.
Economic activity slumped in India drastically with visible impact in the manufacturing and agriculture sectors. There was also a rise in government spending, while households economised their spends, the report noted.
The Gross Domestic Product (GDP) decelerated to five per cent and 4.5 per cent in the April-June and July-September quarters of 2019, respectively, the lowest readings since 2013, as per the report.
With inputs from Housing.com News