Economic Survey pegs 7% growth in FY20, claims stability would push animal spirit

By Sarkaritel July 4, 2019 13:21

New Delhi, July 4  Even as headwinds continue to hurt various sectors especially manufacturing, the Economic Survey has projected India would grow at 7 per cent in 2019-20 and maintain its fastest growing large economy tag in the world.

The forecast has come close on the heels of India registering slowdown in the last four quarters with the January-March period recording the slowest pace in last five years.

“The year 2019-20 has delivered a huge political mandate for the government, which augurs well for high economic growth. Real GDP growth for the year 2019-20 is projected at 7 per cent, reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19,” the Survey said.

Maintaining that both downside risks and upside prospects persist in 2019-20, the Survey said that investment cycle is expected to pick up in FY20 on the back of higher credit growth and improved demand.

Further, the accommodative monetary policy is expected to reduce lending rates provided transmission mechanism improves. The decline in non-performing assets (NPAs) as a result of resolution of stressed assets is set to push the capex cycle.

The Modi government’s flagship economic document said that political stability in the country should push the animal spirits of the economy, while higher capacity utilisation and uptick in business expectations should increase investment activity in 2019-20.

Revival of consumption would, however, be key for growth. The newly-launched PM Kisan Scheme, that promises to transfer Rs 6,000 cash in the bank accounts of rural households, is expected to push rural wages and hence demand.

“However, downside risks to consumption remain. The extent of recovery in the farm sector and farm prices will decide the push to rural consumption, which is also dependent on the situation of the monsoon,” the Survey noted.

By Sarkaritel July 4, 2019 13:21

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