Business, Economy & Banking Current Affairs - 2019

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India’s GDP Forecasts by Fitch Ratings

In it’s Global Economic Outlook report, Fitch Ratings has cut India’s economic growth forecast for the next financial year 2019-20 starting from April 1 to 6.8 per cent from its previous estimate of 7 per cent, on the account of weaker than expected momentum in the economy.

GDP Forecasts

  • Even though Fitch Ratings has reduced the GDP forecasts for India, it sees Indian GDP growth to hold up reasonably well, at 6.8 per cent, followed by 7.1 per cent in 2021-22.
  • India’s GDP growth for the financial year 2019-20 was reduced to 7.2 per cent from 7.8 per cent earlier in December 2018.
  • Further, the growth forecasts for 2020-21 and 2021-22 was reduced to 7 per cent from 7.3 per cent and 7.1 per cent from 7.3 per cent, respectively.

Fitch Ratings observes that Reserve Bank of India (RBI) has adopted a more dovish monetary policy stance and cut interest rates by 0.25 percentage at its February 2019 and it expects another 25 bps cut in 2019, amid protracted below-target inflation and easier global monetary conditions than previously envisaged.

Fitch notes that benign oil price outlook and expectations of accelerating food prices in the coming months should support rural households’ income and consumption.

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Proceeds from Disinvestments exceeds Target

The proceeds from the disinvestments have exceeded the disinvestment target for the fiscal 2018-19 by Rs 5,000 crore taking the total proceeds to Rs 85,000 crore against the targeted Rs 80000 Cr.

Disinvestments

Disinvestment refers to the process of public asset sales by the government of India. Industrial Policy provides that in order to raise resources and encourage wide public participation, a part of the government shareholding in the public sector would be offered to mutual funds, financial institutions, general public and employees.

Disinvestments are undertaken to fulfil the objectives such as modernisation of the public sector through strengthening R & D, initiating diversification/ expansion programmes, retraining and re-employment of employees, funding genuine needs of expansion, widening the capital market basis and mitigating fiscal deficit of the government.

Financial Year: Proceeds from Disinvestment

2014-15: Rs 26,068 crore

2015-16: Rs 23,997 crore

2016-17: Rs 46,247 crore

2017-18: Rs 1,00,056 crore

This is the second highest disinvestment proceeds in a financial year and the government in fiscal 2017-18 had mopped up a little over Rs 1 lakh crore against the target of Rs 72,500 crore. The government has set a target of Rs 90000 crore for fiscal 2019-20.

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