An SBI report said that India's GDP (gross domestic product) growth for the second quarter (Q2) of 2019-20 may further fall to 4.2% on low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure.
It has also lowered the country's GDP growth forecast for the whole year to 5% from 6.1% earlier.
With this report, the State Bank of India (SBI) joins major agencies including World Bank, OECD, RBI and the IMF in downgrading India's FY20 growth rates.
"Based on our composite leading indicator that suggests the GDP growth to slow down further from 5.0% in Q1 of FY20 to 4.2% on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure", the bank's report said.
For the first quarter, the country's GDP grew at 5 percent, the lowest in 6 years. Data for Q2 are scheduled to be released on 29 November.
"Our 33 high frequency leading indicators reveal an acceleration rate which was 65% in Q1 FY19 declined sharply to 27% in Q2 FY20."
The report also spoke of excess rain and floods, in the four-month monsoon period, destroying crops in major agrarian states, which could have a negative impact on agricultural growth.
"We expect Q2GDP growth at 4.2%. Our acceleration rate for 33 leading indicators at 85% in October 2018 is down to just 17% in September 2019, with such decline gaining traction from March 2019."
"Even IIP growth number for September 2019 was 4.3%, which is quite alarming. We are revising our GDP forecast for FY20 to 5% from 6.1% earlier," the SBI Ecowarp said.
"We expect growth rate to pick up pace in FY21 to 6.2%," it said adding that, however the bank believes "this growth rate in FY20 should be looked through the prism of synchronised global slowdown."
"India is also significantly lower in Economic Uncertainty Index when compared globally. We also believe that Moody's change in outlook from stable to negative will not have any significant impact as rating actions are always a laggard indicator and the markets this time have categorically given a thumbs down to such indicators," it added.