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27 May, 2019 14:49

Indian economy to fall slightly short of forecasts as Modi prepares to take oath

Indian economy to fall slightly short of forecasts as Modi prepares to take oath

India’s GDP growth is expected to be at 6.9 percent, slightly lower than the previously-projected level of 7 percent, according to India Ratings and Research (Ind-Ra) which urges the new government to take on reviving the economy.

In the forecast, which is focused on the fiscal 2018-19 that ends on July 31, the agency stressed that the growth in the fourth quarter would slow to 6.3 percent from 6.6 percent in the previous quarter.

According to Ind-Ra, the current fiscal year will be the second consecutive period of economic decline in India. The GDP saw a growth of 7.2 percent during 2017-18. The fresh outlook comes ahead of the inauguration of Prime Minister Narendra Modi for a second term.

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“Arresting the slowdown and reviving the economy will be the first challenge for the new government,” the rating agency said. “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.”

In separate research, the country’s top industrial body, the Federation of Indian Chambers of Commerce & Industry (FICCI), said the new government should concentrate on urgent tax and interest rate cuts to revive the economy.

“The recent signs of slowdown in the economy stem not only from slow growth in investments and subdued exports but also from weakening growth in consumption demand,” the institution said. “This is a matter of serious concern and if not addressed urgently, the repercussions would be long term.”

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As Modi’s cabinet is expected to approve the next budget in a month, the agency is calling for slashing corporate and individual taxes, while expanding the program of handing 6,000 rupees ($86) a year to poor farmers.

“The upcoming budget...is an opportunity for the government to boost consumption and investments through appropriate fiscal stimulus and policies,” it said.

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