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Explained: Why India's economic growth is much weaker than expected

By Shreya
|

New Delhi, Sep 13: The Indian economy is facing the worst growth slowdown in six years. Economists feels that strong policy reforms are needed to tackle the slowdown, which seems to be a mix of structural and cyclical factors.

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Amid the growing concerns, the IMF has called India's economic growth is "much weaker" than expected. The MF has attributed the reasons for corporate and environmental regulatory uncertainty and lingering weaknesses in some non-bank financial companies.

"We will have a fresh set of numbers coming up but the recent economic growth in India is much weaker than expected, mainly due to corporate and environmental regulatory uncertainty and lingering weakness in some non-bank financial companies," IMF spokesman Gerry Rice told reporters at a news conference here on Thursday.

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The risks to the outlook are tilted to the downside, he added.

Responding to a question on the recent GDP figures of India, Rice said the IMF will monitor the economic situation in India.

The International Monetary Fund (IMF) in July projected a slower growth rate for India in 2019 and 2020, a downward revision of 0.3 per cent for both the years, saying its GDP will now grow respectively at the rate of 7 and 7.2 per cent reflecting a weaker-than-expected outlook for domestic demand.

However, India will still be the fastest-growing major economy of the world and much ahead of China, the Washington-based global financial institution had said.

India's economic growth has slowed to 6.8 per cent in 2018-19 - the slowest pace since 2014-15, and various projections by private experts and the central bank estimate that the GDP growth in the current year will be less than government estimate of 7 per cent

In ominous signs that the slowdown may be deep, the auto sector is facing its worst crisis in two decades with reports suggesting thousands of job losses in the automobile and ancillary industry, real estate sector has huge unsold inventory, while fast-moving consumer goods (FMCG) companies have reported a decline in volume growth.

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