India Ratings cuts growth forecast for FY 2019-20 to 6-year low at 6.7%

Another risk to the economy is that inflation may rise, depending on the behaviour of oil and rupee value against the dollar, said Sunil Kumar Sinha, principal economist at India Ratings

Counting dwindling consumption expenditure as one of the factors affecting the Indian economy, India Ratings on Wednesday said the new government, despite its thumping majority in the Lok Sabha, could not instill confidence in people that their income would grow in the coming years. "The Budget (for 2019-20) also could not do so," said Sunil Kumar Sinha, principal economist at India Ratings. 

The measures announced by Finance Minister Nirmala Sitharaman last week are likely to support economic growth in the medium term, India Ratings said. Sinha also did not agree with those who called the economic slowdown as cyclical. He said NPAs of banks that have been on the downward swing may again grow due to the slowdown.

Another risk to the economy is that inflation may rise, depending on the behaviour of oil and rupee value against the dollar, he said. India Ratings pegged economic growth in the first quarter of the  current financial year at 5.7% against 5.8% in the previous quarter.

It scaled down economic growth for FY20 to a six-year low of 6.7% against the previous estimate of 7.3%. The numbers for the first quarter of the current financial year would be released on Friday.