Growing Gross Domestic Product (GDP) is a sign of growth of any country. As GDP represents the value of goods and services produced in a country, in a given period of time. There is high expectations for India’s Q4 GDP announcement. India’s GDP Q3 FY 2019 settled at 6.6% bringing down the fiscal GDP growth rate to 7%.
Another slowdown
On May 31, the Central Statistics Office (CSO) will release the quarterly GDP estimate for the Q4 FY19 and provisional annual estimates for 2018-19. According to economic researchers at SBI the January-March period growth could come down to 5.9-6.1%, pulling full years’ growth to 6.9%, as against the advance estimate of 7%. While India Ratings and Research (Ind-Ra) in a press release said that it expects Q4 FY19 GDP growth to slow down to 6.3% from 6.6% in the previous quarter.
Impact
2018-19, will be second consecutive year of slowdown.
  • The Reserve Bank of India (RBI), in its second monetary policy meeting in June is expected to introduce further cuts in lending rates and thereby infuse liquidity in the market.
  • Inflation inching up steadily, according to report by CARE Ratings, it is expected to rise to ~ 4% in 2019-20 as compared to 3.4% in 2019-20.
  • The rate cut could be between 25bp rate cut, as per reported by Nomura, Japanese financial major.
The good news
According to Nomura, India can attract FDI to a ratio of 1.5% to 2% of it’s GDP by further improving ease of doing business and building infrastructure in the country.
Experts believe that this slowdown can be arrested if the government takes steps to introduce policies and reforms to boost growth in short as well as long term.