RBI Slashes GDP Forecast For 2019-20 To 5%

The Reserve Bank of India today slashed the GDP forecast for 2019-20 from 6.1 per cent made in the Oct Monetary Policy to just 5 per cent in the Dec Monetary Policy.

RBI Slashes GDP Forecast For 2019-20 To 5%

"Various high frequency indicators suggest that domestic and external demand conditions have remained weak. Based on the early results, the business expectations index of the Reserve Bank's industrial outlook survey indicates a marginal pickup in business sentiments in Q4. On the positive side, however, monetary policy easing since February 2019 and the measures initiated by the Government over the last few months are expected to revive sentiment and spur domestic demand.

Taking into consideration these factors, real GDP growth for 2019-20 is revised downwards from 6.1 per cent in the October policy to 5.0 per cent - 4.9-5.5 per cent in H2 and 5.9-6.3 per cent for H1:2020-21 (Chart 2). While improved monetary transmission and a quick resolution of global trade tensions are possible upsides to growth projections, a delay in revival of domestic demand, a further slowdown in global economic activity and geo-political tensions are downside risks," the central bank said in a release.

The Reserve Bank of India is amongst the many institutions to cut GDP forecast based on several high frequency indicators, suggesting that growth in the economy is sliding very fast.

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