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What does India's growth trajectory look like in 2018-19? Here's what FICCI thinks

PW Bureau

The minimum and maximum growth estimate stood at 6.8 percent and 7.3 percent respectively for 2019-20 in the survey conducted by FICCI New Delhi: The latest round of FICCI’s Economic Outlook Survey has put forth an annual median GDP growth forecast for 2019-20 at 7.1 percent and the projection for fiscal 2020-21 has been put at 7.2 percent. The minimum and maximum growth estimate stood at 6.8 percent and 7.3 percent respectively for 2019-20 in the survey, which was conducted in May 2019 among economists belonging to the industry, banking and financial services sector.

Agriculture and allied activities to grow at 3%

The median growth forecast for agriculture and allied activities has been put at 3.0 percent for 2019-20. Industry and services sector is expected to grow by 6.9 percent and 8.0 percent respectively during the year.

GDP growth of 6.5% in the fourth quarter

Further, the quarterly median forecasts indicate a GDP growth of 6.5 percent in the fourth quarter of 2018-19. The official growth numbers for the fourth quarter will be released on May 31. The median growth forecast for IIP has been put at 4.4 percent for 2019-20 by the participating economists, with a minimum and maximum range of 3.3 percent and 5.5 percent, respectively.

WPI based inflation rate is projected at 3.1%

The outlook of participating economists on inflation remained moderate. WPI based inflation rate is projected at 3.1 percent in 2019-20, with a minimum and maximum range of 2.1 percent and 4.0 percent respectively. On the contrary, CPI-based inflation has a median forecast of 4.0 percent for 2019-20, with a minimum and maximum range of 3.5 percent and 4.1 percent, respectively. Concerns remain on the external front with median current account deficit forecast pegged at 2.1 percent of GDP for 2019-20. Median export growth is pegged at 4.0 percent in 2019-20. Imports, on the other hand, are forecasted to grow at 3.8 percent in the same year.

The experts’ view

Participating economists unanimously felt less sanguine about the export sector’s outlook in the current year. An escalation in trade war tensions has clouded the global trade growth outlook. This is having an impact on overall world economic growth as well. Economists felt that greater efforts will be needed in the current global environment to keep up with the current growth momentum. Economists were also of the view that while greater trade protectionism can harm India’s export growth, it also creates opportunities from re-localization of trade flows. It was recommended that India must be proactive to spot and seize such opportunities to enhance its exports. India must focus on diversifying its export basket as well as markets to capture a greater share in world exports. Venturing into new markets in South East Asia, Central Asia, Central America and African subcontinent can help in dealing with the protectionist stance amongst advanced countries. In addition, India must relentlessly focus on improving its competitiveness, especially in labour-intensive sectors.

‘Govt should ensure timely refund of GST’

Other measures such as ensuring adequate availability of affordable credit, timely refund of GST, providing incentives like interest subsidy to merchant exporters and provision of budgetary support for marketing and exports related infrastructure are some of the important steps that the government must consider. Majority of the participating economists believed that the United States’ decision to end waiver granted to countries amidst sanctions imposed on Iran is significant and will affect major oil importing countries including India. This becomes a major concern at a time when international prices of crude oil have been on the rise due to other factors such as supply constraints being undertaken by OPEC countries.