Crisil rating lowered India's GDP growth forecast for FY 2020 from 6.3 percent to 5.1 percent. Crisil attributed this to weak growth in private consumption, weak growth in Tax collections and factors other than industrial production.
Crisil said on Monday that the major concern is to reduce the growth rate to 6.1 percent in the second quarter, which is the lowest in the new GDP series. Crisil said, "We expect an average of 8.9 percent of nominal GDP in this fiscal year, compared to 12 percent in the budget."
According to news agency IANS, Crisil made this amendment in the growth rate estimate at a time when the three-day meeting of the RBI's Monetary Policy Committee (MPC) is scheduled to begin on Tuesday. It is expected that the key rates will be cut to support the growth rate in the meeting.
Significantly, in the second quarter of the current financial year (2019-20), the GDP figure has reached 4.5 percent. This is the biggest decline in any one quarter in almost 6 years. Earlier, the country's GDP rate was at this level in the March 2013 quarter.
The important thing is that the country's GDP has been falling for 6 consecutive quarters. In the first quarter of the last financial year 2019, the growth rate was at 8 percent, then in the second quarter it dropped to 7 percent. Similarly, the GDP growth rate was 6.6 percent in the third quarter of the last fiscal and 5.8 percent in the fourth quarter. In addition, the GDP growth rate fell to 5 per cent in the first quarter of FY 2020.
Due to the reduction in GDP growth, India has lost the title of world's fastest growing economy and now the tag is with China. In the first quarter of this fiscal, India's GDP has grown by 5.01 percent, while China has grown by 6.2 percent.
What is GDP?
Gross domestic product (GDP) is the total monetary or market value of all goods and services produced within a defined time frame within a country. It is a comprehensive measurement of a country's domestic production and it shows the health of a country's economy. It is usually calculated annually, but in India it is judged every three months i.e. quarterly.
