India's GDP is expected to grow at 5 per cent, in line with the CSO's estimates for FY20, a rating agency said. The gross domestic product (GDP) may grow at 5.5 per cent in FY21, however, the downside risks are expected to remain, India Ratings and Research (Ind-Ra) also said. The FY20 nominal GDP growth is seen at 7.5 per cent and FY21 at 9.3 per cent, the report noted. Some improvement is expected in FY21, these risks are going to persist, the report also said. The slowdown is expected to be due to a slew of factors including an abrupt and significant fall in lending by non-banking financial companies close on the heels of a slowdown in bank lending, reduced income growth of households coupled with a fall in savings and higher leverage and inability of the dispute resolution judicial systems to quickly unlock the stuck capital.
GDP's first advance estimates recently released by the government said that the GDP would grow at 5 per cent in FY20. In Q2, the economy grew at a dismal 4.5 per cent on account of sluggish demand and weak consumption.
The International Monetary Fund (IMF) recently slashed the growth estimates for both the Indian and the global economy. The global growth is expected to reach 3.3 per cent in 2020, compared to 2.9 per cent in 2019, the slowest pace since the financial crisis a decade ago. The Washington-based international crisis lender revised downward India's GDP growth projection to 4.8 percent for FY20 and to 5.8 percent for FY21. "(India's) domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth," the IMF report said.