Crisil retains 7.6% growth estimate for FY19 on lower base

Attributing the continuing slowdown to the impacts of the demonetisation, GST implementation and weakness in agriculture, rating agency Crisil has maintained its FY19 growth estimate at 7.6 per cent on the low base. “The pace of economic growth has slowed down this fiscal year, which is attributable mostly to the lingering impact of the demonetisation, transitory disruptions caused by the implementation of the goods and services tax (GST), and weak agricultural growth,” it said in a note today.

The note comes days after the Central Statistical Office came out with its advanced estimates of growth for FY18 suggesting a slowdown in GDP expansion to 6.5 per cent, the lowest in four years. The agency, however, held on to its FY19 growth estimate of 7.6 per cent primarily on the low base of FY18. “Given the low base and the expected waning of the GST impacts going ahead, we retain our forecast of 7.6 per cent real GDP growth in fiscal 2019, with private consumption leading the recovery,” it said.

Private consumption will grow 6.3 per cent in FY18, over a high base of an 8.7 per cent growth in FY17, and will remain the biggest contributor to GDP at 55.7 per cent, the report said. In FY19 as well, growth will continue to be consumption-led as inflation will under control and interest rates are expected to be soft, it said, adding a rise in government employees’ salaries with the implementation of the seventh pay panel recommendations will also help. The rural focused-government spending will also be of help, it added.

The Rs. 2.11-trillion recapitalisation programme will ensure that the state-run banks are well positioned to support the growth, it said. Support to growth will also come from the external sector where the global recovery should help exports, which had faced some headwinds after the GST implementation, it said.

Attributing the continuing slowdown to the impacts of the demonetisation, GST implementation and weakness in agriculture, rating agency Crisil has maintained its FY19 growth estimate at 7.6 per cent on the low base. “The pace of economic growth has slowed down this fiscal year, which is attributable mostly to the lingering impact of the demonetisation, transitory disruptions caused by the implementation of the goods and services tax (GST), and weak agricultural growth,” it said in a note today.

The note comes days after the Central Statistical Office came out with its advanced estimates of growth for FY18 suggesting a slowdown in GDP expansion to 6.5 per cent, the lowest in four years. The agency, however, held on to its FY19 growth estimate of 7.6 per cent primarily on the low base of FY18. “Given the low base and the expected waning of the GST impacts going ahead, we retain our forecast of 7.6 per cent real GDP growth in fiscal 2019, with private consumption leading the recovery,” it said.

Private consumption will grow 6.3 per cent in FY18, over a high base of an 8.7 per cent growth in FY17, and will remain the biggest contributor to GDP at 55.7 per cent, the report said. In FY19 as well, growth will continue to be consumption-led as inflation will under control and interest rates are expected to be soft, it said, adding a rise in government employees’ salaries with the implementation of the seventh pay panel recommendations will also help. The rural focused-government spending will also be of help, it added.

The Rs. 2.11-trillion recapitalisation programme will ensure that the state-run banks are well positioned to support the growth, it said. Support to growth will also come from the external sector where the global recovery should help exports, which had faced some headwinds after the GST implementation, it said.

Source:http://www.thehindubusinessline.com/economy/crisil-retains-76-growth-estimate-for-fy19-on-lower-base/article10020235.ece

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *