Mumbai, December 2
The slowdown is deeper than anticipated and will be prolonged, ratings agency Crisil warned today slashing its growth estimate sharply to a low 5.1% from 6.3% earlier.
The agency attributed the sharp revision to various high-frequency indicators showing a softness and partly blamed the same to the reforms like GST, real estate regulation, and the bankruptcy code which are still a “drag” on the economy which is yet to adjust to the changes unveiled years before.
The Crisil’s estimate is among the lowest, but still above Japanese brokerage Nomura’s 4.7% forecast.
The RBI, which is scheduled to review the monetary policy on Thursday, had in the October review lowered its forecast to 6.1% — down a full 90 bps from its August forecast.
Given the gathering storm, the monetary authority is widely expected to slash its rates further — after five successive rate cuts to the tune of 135 bps, bring down the policy rates to a nine-year low of 5.45%.
Official data released on Friday showed the September quarter GDP hitting a 26-quarter low of 4.5%, penciling the first half growth at a low 4.75%.
“The economy is going through a deeper-than-anticipated slowdown, as weakness in the real sector and stress in the financial sector feed into each other,” the Crisil report said.
“Key short-term indicators like industrial production, merchandise exports, bank credit offtake, tax mop-ups, freight movement, and electricity production, all point to a weakening growth momentum,” the report underlined. However, it expects a “mild” pick-up in growth in the second half. — PTI
Key factors to weak growth momentum
- The agency attributed the sharp revision to various high-frequency indicators showing a softness and partly blamed the same to the reforms like GST, real estate regulation, and the bankruptcy code which are still a “drag” on the economy
- The Crisil’s estimate is among the lowest, but still above Japanese brokerage Nomura’s 4.7% forecast
- It said key short-term indicators like industrial production, merchandise exports, bank credit offtake, tax mop-ups, freight movement, and electricity production, all point to a weakening growth momentum
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