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  Business   Economy  07 Jun 2019  GDP growth may accelerate to 7.2 per cent in FY20: Report

GDP growth may accelerate to 7.2 per cent in FY20: Report

PTI
Published : Jun 7, 2019, 3:27 pm IST
Updated : Jun 7, 2019, 3:27 pm IST

Goldman Sachs report said it expects an acceleration in GDP to 7.2 per cent.

Regulatory actions proposed by the RBI to tackle the liquidity problems, and the asset liability mismatches will lead to the dip in loan growth by the companies, the report said.
 Regulatory actions proposed by the RBI to tackle the liquidity problems, and the asset liability mismatches will lead to the dip in loan growth by the companies, the report said.

Mumbai: American brokerage Goldman Sachs on Friday pegged the Indian Gross Domestic Product (GDP) growth to accelerate to 7.2 per cent in 2019-20 on lower oil prices, political stability and removal of infrastructure bottlenecks.

Risks to the estimate, which is higher than the RBI's projection for a 7 per cent growth, are on the "downside" because of the issues in the non-bank lenders, it said. It can be recalled that the growth had dipped to a nearly five year low of 5.8 per cent for the March quarter at 5.8 per cent, dragging down FY19 growth to 6.8 per cent.

 

In a report that came a day after the policy review by RBI, in which key rates were cut 0.25 per cent to spur growth, the brokerage said it expects an acceleration in GDP to 7.2 per cent. "The acceleration is based on our assumption of lower oil prices in FY20, an increase in confidence post the elections once the new government and the cabinet take office, and some easing of infrastructure bottlenecks," it said.

On the concerns surrounding NBFCs, the brokerage said lending by such companies grew sharply in recent times and stood at 26 per cent in third quarter of 2018, which has slipped to 20 per cent in the succeeding quarter, and is expected to slow further.

 

Regulatory actions proposed by the RBI to tackle the liquidity problems, and the asset liability mismatches will lead to the dip in loan growth by the companies, it said. The RBI is likely to cut rates by a similar 0.25 per cent once more in July-September 2019 as inflation remains within its comfort range, it said.

However, once the growth rises and with it the inflation, the focus will be back on tightening and the Central bank may move with two hikes of 0.25 per cent each in 2020, it said. It can be noted that the RBI had shifted stance of the monetary policy to "accommodative" which was explained as a scenario where there will be no rate hikes.

 

Tags: goldman sachs, gross domestic product, gdp, growth
Location: India, Maharashtra, Mumbai (Bombay)