Economic slowdown: CRISIL too cuts India’s GDP growth estimate.
The CRISIL Rating on Monday slashed India’s growth estimate from 6.3% to 5.1% for the fiscal year 2020. It cited a dip in fixed investment, weak private consumption growth, weak growth in tax collections and industrial production as few reasons behind the cut. However, CRISIL did not rule out the possibility of ‘mild’ pick-up in growth in the second half of the year from 4.75% to 5.5%.
The move comes ahead of Reserve Bank of India’s (RBI) monetary policy committee (MPC) meet between December 3 and 5 to review the interest rates. The RBI will make an announcement on lending rates on December 5 and experts are anticipating it will slash rates for the sixth time now.
The statement released by CRISIL read, “Key short-term indicators like industrial production, merchandise exports, bank credit off-take, tax mop-ups, freight movement and electricity production, all point to a weakening growth momentum.”
The agency added, “The economy is going through a deeper than an anticipated slowdown, as weakness in the real sector and stress in the financial sector feed into each other.”
The credit rating agency has also expressed its concern over weakness in manufacturing with gross value-added by the sector contracting in Q2. It added that there was a weakness in construction, trade, hotels, transport, and communications as well and the weakness in the financial sector is aggravating the demand-led slowdown too.