The GDP numbers have come in dismal for the Q1FY20 at just 5% against 8% growth for Q1FY19. Low levels point to a broad based recession and this is a second consecutive timw when the GDP is reported sub 6% levels.
The scenario opens more room for rate cut, even higher than 50 bps by the December.
The GDP number will hence now push the economy into action and consolidation at banking level will help push up the economy.
All that is needed is how strong the fiscal push is needed to reverse the economy back to its form.
At the corporate level too, companies are looking at aversing risk and are focusing less on investments. So, there remains more cyclical impacts and some structural reforms that need be taken.
RBI in its just passed by August MPC revised its GDP outlook for India yet again lower to 6.9% from the previous 7%. RBI said the GDP growth projection for the H1FY20 stands between 5.8 percent and 6.6 percent as against 6.4 percent and 6.7 percent earlier while that of the second of the year stands between 7.3 percent and 7.5 percent.