For a second consecutive year, India’s economic growth in fiscal 2019-20 is likely to be sub-7 per cent, Singapore- based DBS Group has said in its latest report. After hitting a speedbump in first quarter of 2019, growth is likely to soften into first half of 2019-20. Favourable base effects and lower rates might help to lift activities in the second-half.
“Inflation has been creeping up but is benign due to a weaker core. Monsoon strength and oil are under watch. We have revised down the FY20 inflation forecast,” economist Radhika Rao said in the report.
RBI’s monetary policy has adopted an accommodative hue with fiscal consolidation a priority and inflation below target. And despite a proposed offshore sovereign bond issuance, reserves adequacy remains comfortable at this juncture, the report said.
The Indian rupee has remained under pressure due to a supported US dollar and active reserves accumulation. However, by year-end, USD-INR is expected to drift North with INR faring better than its export-reliant Asian peers, it added.