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India Ratings cuts growth forecast for FY19 to 7.2%
Why in the news ?
- India Ratings & Research, revised down its growth estimate for Indian economy to 7.2 per cent from its earlier projection of 7.4 per cent for 2018-19.
Details
- The downward revision comes as the rating agency expects Indian economy to face headwinds from :
-High crude oil prices,
-Increase in minimum support prices of kharif crops,
-Rising trade protectionism,
-Depreciating currency and
-No visible signs of the abatement of the non-performing assets (NPA) of the banking sector.
- As per the report, capital expenditure by the government alone will be insufficient to revive the Capital Expenditure (capex) cycle, as its share in the total capex of the economy was only 11.1 percent during 2012-17.
- A high level of capex in a country is believed to be a good indicator of economic growth since it projects a high level of confidence in the growth story of a country.
- Among the growth drivers, private final consumption expenditure is projected to grow at 7.6 percent in 2018-19 compared to 6.6 percent in 2017-18.
- Expansion of government final consumption expenditure is expected to slow down to 8.6 per cent from 10.9 per cent during the same period.
Source
The Hindu, Indian Express