The brokerage firm cautioned that there is a possibility of further downside risks to growth, especially in the near term as RBI's policy interest rate cuts in recent months has not been translated into reduction in bank lending rates.
The country's gross domestic product (GDP) growth is likely to be 8.8 to 9 per cent in the current financial year, driven by agriculture and industry sectors, Care Ratings said in a report. The country's economy had contracted by 7.3 per cent in fiscal 2020-21. The agency said the outlook for the Indian economy on almost all counts in FY22 would look seemingly better than FY21 on account of the negative base effect.
Structural reforms, pro-people programmes and employment opportunities helped the economy get new vigour, the finance minister said. After contracting by 5.8 per cent in 2020-21, the economy recorded a growth of 9.1 per cent in 2021-22.
Stating that the economic costs of shutdown of the global economy are accumulating rapidly, Moody's projected that all G-20 advanced economies would contract by 5.8 per cent in 2020.
In the manufacturing sector, output is expected to decline by about 70 per cent as only food-processing, and drugs and pharma industries are allowed to operate while other segments, such as engineering and metals, have shut operations.
The three main reasons behind the cautious optimism about Indian economy include, first, weaker rupee which will boost net exports, secondly, the government's reforms will provide a quick boost to business confidence, and thirdly, the previous rate rises should support investment and durables consumption.
A month-long national lockdown to arrest the spread of COVID 2.0 could shave off 100-200 bps of GDP, leading to a 300 bps risk to annual growth, a brokerage report has flagged while expressing doubts over the ability of local lockdowns to control the pandemic. The second wave of the coronavirus inflection has caught the government off-guard with the daily cases jumping over 6.5 times in the past 30 days. With close to 3.53 lakh fresh daily infections, the country is the worst hit globally.
The National Council of Applied Economic Research (NCAER) on Thursday lowered the GDP projection for the current fiscal to 4.7-4.9 per cent due to exchange rate depreciation.
Hopes of revival and earnings growth in 2020, surprise tax cuts, and robust foreign flows - thanks to easy global monetary policies - are a few reasons why the markets have managed to digest the low GDP footprint. Select bluechips such as Reliance Industries, Bajaj Finance, Asian Paints, and ICICI Bank have gained sharply this year. On the other hand, YES Bank, Zee Entertainment, and Indiabulls Housing have seen a sharp fall.
The government will announce the FY13 GDP numbers on May 30, where it expects the readings to be around 5.2 per cent.
Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
Portfolio returns, say analysts at Morgan Stanley, are more likely to be driven by bottom-up stock-picking rather than top-down macro forces.
Current Account Deficit is projected at 1.2 per cent and 1 per cent of GDP in 2014-15 and 2015-16.
Think tank NCAER on Friday said the country's growth rate is likely to be 5.9 per cent, a tad lower than its previous forecast due to slowdown in key manufacturing and services sectors.
It is projected to cross the $3 trillion mark in 2019
RBI Governor Shaktikanta Das said that early containment of the pandemic could impart an "upside" to the economic growth outlook.
The revision of the consumer price index and GDP base years from 2011-12 and 2012, respectively, were dependent on the outcomes of the consumer expenditure survey of 2017-18 that the government decided to junk recently.
Comparative to other Asian GDP growths, India would have the fastest economic expansion, it said
The agriculture sector has witnessed feeble growth on account of drought for two successive years
The agency attributed the sharp revision to various high-frequency indicators showing a softness and partly blamed the same to reforms like GST, real estate regulation, and the bankruptcy code which are still a "drag" on the economy.
A Reserve Bank-authorised survey on Monday lowered the country's economic growth rate projection to 5.7 per cent for the current fiscal, down from 6 per cent estimated earlier.
Economic growth has slipped to a six-year low of 5 per cent for the June quarter and is expected to turn in lower than that in the September quarter. Lack of consumption is seen as one of the key factors pulling down growth.
In Q1, India's GDP shrank by a staggering 24 per cent year-on-year amid the imposition of one of the most stringent global nationwide lockdowns.
However, the World Bank has projected India's GDP growth rate at 7.5 per cent for the next three financial years, including the current one.
Macro data have little connect with indicators on the ground.
After two months of net outflow, foreign investors turned buyers in June, infusing Rs 26,565 crore in Indian equities, driven by political stability and a sharp rebound in markets. Looking ahead, attention will gradually shift towards the budget and Q1 FY25 earnings, which could determine the sustainability of FPI flows, Vipul Bhowar, Director, Listed Investments, Waterfield Advisors, said.
Rajan had said that there was lack of clarity about the new method.
The report further said that confidence is improving, while risk aversion is falling and has upgraded industrial production to neutral from negative.
The agency said announcements by Modi and Finance Minister Arun Jaitley after government formation 'signal a strong intention to pursue reforms'.
India's economic growth had slumped to a decade's low of five per cent in 2012-13.
The surge in investment in manufacturing seems to have prompted the International Monetary Fund to increase the gross domestic product growth forecast to 8.4 per cent for 2007.
According to a research report by Bank of America Merrill Lynch, despite better rains the growth forecast for this fiscal is likely to be around 5.6 per cent.
Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts. The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023. The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7.
The NCEAR has indicated some improvement in the fourth quarter of the current financial year.
India's services sector growth recorded another month of robust expansion in July, albeit at a slightly slower pace than in June, largely supported by robust demand conditions and investment in technology, a monthly survey said on Monday. The seasonally adjusted HSBC India Services Business Activity Index was at 60.3 in July, down only fractionally from 60.5 in June. In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Projecting a much better forecast than those made by the government and Reserve Bank of India, economic think tank NCAER on Tuesday said the Indian economy could grow by up to 8.9 per cent during 2008-09, despite a global slowdown.
India has been relatively insulated from the severe headwinds in the West. However, with a third of the global economy expected to slip into recession in calendar year 2023, the impact will strongly be felt on India's exports and trade economy, leading economists said in a panel discussion at the Business Standard BFSI Insight Summit in Mumbai on Wednesday. The panel comprised former Reserve Bank of India executive director and former Monetary Policy Committee member Mridul Saggar, State Bank of India Chief Economic Advisor Soumya Kanti Ghosh, Citibank India Chief Economist Samiran Chakraborty, ICRA Chief Economist Aditi Nayar, and IndusInd Bank Chief Economist Gaurav Kapoor. The topic of the panel discussion was No recession in sight: Is India decoupled from developed economies?
During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago.
Chief Economic Advisor Krishnamurthy Subramanian said India's economy will witness a decline in the current fiscal, but the drop will be limited if there is an economic recovery in the October-March period.
