The Central Statistics Office will be releasing India GDP growth data for January-March 2019 and provisional annual estimates for 2018-19 on May 31. (Photographer: Dhiraj Singh/Bloomberg)

India Ratings Expects India GDP Growth At 6.9% In FY19, Lower Than CSO Estimate

India's gross domestic product will expand by 6.9 percent in 2018-19, marginally lower than Central Statistics Office's advance estimate of 7 percent, India Ratings and Research Pvt. Ltd. said Monday, urging the new government to take short-term measures to arrest slowdown in the Indian economy.

The Central Statistics Office will be releasing India's GDP growth data for January-March 2019 and provisional annual estimates for 2018-19 on May 31.

"Ind-Ra expects FY19 GDP growth to be 6.9 percent as against the 2018-19 advance estimate of 7 percent," the ratings agency said. The GDP growth was 7.2 percent during 2017-18.

In a release, Ind-Ra said it expects Q4FY19 GDP growth to decelerate to 6.3 percent from 6.6 percent in the previous quarter. Clearly, Ind-Ra said, 2018-19 will be the second consecutive year of an economic slowdown in India.

Arresting the slowdown and reviving the Indian economy will be the first challenge for the new government, it said.

Prime Minister Narendra Modi will be taking oath of office on May 30 for a second time after the Bharatiya Janata Party-led National Democratic Alliance secured majority in the just-concluded 2019 Lok Sabha elections.

"In Ind-Ra's opinion, the new government will have to devise and execute both short-term and medium-to-long-term measures to arrest the slowdown. While cyclical challenges can be addressed through short-term measures, the need of the hour is to address the structural challenges plaguing the Indian economy," it said.

Although little can be done with regard to the global trade environment, certainly a more proactive policy intervention can be pursued to aggressively revive investment, India Ratings said.

Meanwhile, private sector lender ICICI Bank Ltd. in a research report said that the immediate priorities of the government should be focused on agricultural sector, especially improving farm terms of trade, supporting systemic credit growth not just for banking sector but for the shadow banking sector as well.

“Growth rates to stay weak but a combination of strong government policy support and benign monetary policy environment should lead to recovery in growth prospects towards the second half of this fiscal year," it said.

According to the ICICI Bank report, short-term policy priorities of the new government should include agricultural price stability measures, supporting system credit growth especially to small industry, and provision of adequate liquidity and accommodative policy environment among others.

Long-term policy priorities should include land and natural resource-related measures, labour-related measures, capital-related measures, productivity-related measures and sector-wise reforms, the ICICI Bank report said.