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    Crisil slashes FY20 growth forecast to 5.1 per cent

    Synopsis

    The move comes ahead of the RBI's announcement on lending rates on December 5. The RBI's monetary policy committee (MPC) will meet between December 3-5 to review the interest rates. Crisil's revision, which is among the lowest, comes within days of the official data showing a further slip in the second quarter growth to 4.5 per cent.

    Agencies
    The central bank is widely expected to slash rates for the sixth time on December 5. In five reductions so far in 2019, interest rates have been lowered by a total of 135 basis points over concerns that growth momentum is slowing down and also to try to boost liquidity in the financial system.
    Rating agency Crisil on Monday sharply cut its growth forecast for the current financial year to 5.1 per cent from an earlier estimate of 6.3 per cent.

    The move comes ahead of the RBI's announcement on lending rates on December 5. The RBI's monetary policy committee (MPC) will meet between December 3-5 to review the interest rates.

    Crisil's revision, which is among the lowest after Japanese brokerage Nomura's 4.7 per cent forecast, comes within days of the official data showing a further slip in the second quarter growth to 4.5 per cent. This leaves the first half (April-September) growth at 4.75 per cent, a multi-year low.

    "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," Crisil said in a research report.

    However, it expects a "mild" pick-up in growth in the second half.

    Growth in the second half of 2019-20 will go up to 5.5 per cent, up from the 4.75 per cent in the first half, the agency said.

    In October's policy review, the RBI revised downwards its estimate for GDP growth for the current fiscal to 6.1 per cent from 6.9 per cent estimated earlier.

    The central bank is widely expected to slash rates for the sixth time on December 5. In five reductions so far in 2019, interest rates have been lowered by a total of 135 basis points over concerns that growth momentum is slowing down and also to try to boost liquidity in the financial system.
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    8 Comments on this Story

    Sundarv 292 days ago
    They say that economists never agree on anything. But slowing growth seems to be one area where almost all seem to concur with one another.
    Renga Swamy292 days ago
    There is a lag effect of 6 months to 1 yr in most of investment/capes related decisions after policy announcements.Due to intervening loksabha elections many govt and private investment decisions were deferred last year.Banks and NBFCs became lending averse in Q4 FY19.All this revived only after elections.In about 2/3 quarters we will be back to 6 rate of growth in GDP.
    Nemani Hanumanta Rao293 days ago
    Two people at the helm are responsible for this poor GDP. One Ms Nirmala and other Das, RBI. Both have miserably failed.
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