CRISIL SLASHES INDIA’S GROWTH FORECAST FOR FY20 TO 5.1%

MUMBAI: The slowdown is deeper than anticipated and will be prolonged, ratings agency Crisil warned on Monday slashing its growth estimate sharply to a low 5.1% from 6.3% earlier.

The agency attributed the sharp revision to various highfrequency indicators showing a softness and partly blamed the same to the reforms like goods and services tax (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 Reserve Bank of India (RBI), which is scheduled to review of the monetary policy on Thursday, had in the October review lowered its forecast to 6.1%—down a full 90 basis points (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 135bps, bring down the policy rates to a nine-year low of 5.44%.

Official data released on Friday showed the September quarter gross domestic product (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 off-take, tax mop-ups, freight movement, and electricity production, all point to a weakening growth momentum,” the report underlined.