The Central Statistics Office (CSO) is likely to release GDP growth data for the April-June quarter (Q1) at around 5 pm on Friday. Continuing on its downward slide, the economic growth in the first quarter of FY20 is expected to be in the range of 5.2 to 5.7 per cent, which is down from 5.8 per cent in the previous quarter, predict various polls.
According to a Reuters' poll, the Indian economy will likely grow at a year-on-year pace of 5.7 per cent in the June quarter. Several economists -- about 40 per cent of total 65 surveyed in the Reuters poll -- are even predicting the numbers could be down to 5.6 per cent or lower. If that happens, India will clock slowest its growth in over five years, and it'll be the weakest start of a fiscal year quarter in seven years. HDFC Bank has predicted April-June GDP growth at 5.2 per cent, while Axis Bank said the June quarter GDP could be 5.4 per cent.
A Bloomberg poll, which surveyed 30 economists, also predicted GDP growth at 5.7 per cent for the June quarter. The sub-6 per cent growth for the second consecutive quarter will push the economy even further down. The poll also estimates that Gross Value Added could moderate to 5.5 per cent in Q1 from 5.7 per cent in Q4 of the previous fiscal year.
India Ratings and Research Pvt Ltd also expects the Q1 GDP numbers to plunge to 5.7 per cent. The rating agency has even revised its annual growth estimate to 6.7 per cent from earlier 7.3 per cent.
The agency expects FY20 to be the third consecutive year of subdued growth owing to a slowdown in consumption, uneven monsoon, a decline in manufacturing, the inability of Insolvency and Bankruptcy Code to resolve cases timely, and rising global trade tensions.
"On 23 August 2019, Finance Minister Nirmala Sitaraman announced a slew of measures to revive the economy, which included addressing some of the woes facing the auto sector, MSME, banking sector, capital market, etc. However, these measures are likely to support growth only in the medium term," said India Ratings and Research.
Experts suggest that if the GDP growth dips further, it will be a sign of worry for the government, which, so far, has been in a denial mode. They expect some key sectors, including manufacturing and electricity, to show an improvement in growth. However, the service and construction sectors could register mild to slower growth, pushing the overall GDP to below 5.8 per cent level in the June quarter.
Recently, Moody's Investors Service revised downwards India's GDP growth forecast for the current year to 6.2 per cent, saying the economy remains sluggish due to a combination of factors such as weak hiring, distress among rural households and tighter financial conditions.
However, Finance Minister Nirmala Sitharaman said the India's GDP continues to grow at a faster pace than the global economy and any other major economy. She said reform is a continuous process for the Modi government and it tops the agenda.
Edited by Manoj Sharma