Economic growth in FY20 to be hit by rising oil prices, liquidity squeeze at banks: survey report

The CARE Ratings survey on ‘Economic Perspective for 2019’ polled 285 participants from across sectors such as agriculture and allied, manufacturing, financial services, banking, infrastructure, real estate and services on a variety of issues including prospects of the NDA government at the hustings.

The National Democratic Alliance (NDA) government will return to power in 2019, either with a majority or in the form of a coalition with new allies, say most respondents to a CARE Ratings Survey. The survey on ‘Economic Perspective for 2019’  polled 285 participants from across sectors such as agriculture and allied, manufacturing, financial services, banking, infrastructure, real estate and services. Nearly 47 per cent of the respondents said they expect the existing NDA government to come back to power on its own, while 34 per cent feel they may not get absolute majority.

Among those who said the NDA government may not get an absolute majority, 84 per cent agreed that a coalition government with new allies is possible, the credit rating agency said in a report.

The report said that nearly one-third of the respondents feel that implementation of GST (Goods and Services Tax) and resolution of banking system NPAs (non-performing assets) have been unsatisfactory. However, they felt that ‘Housing for all’, ‘Power for all’ and ‘financial inclusion’ have been satisfactory, the report said. 

The respondents feel reaching out to the poor has been more effective unlike the more complex issues such as GST and NPA resolution.

For 42 per cent of the respondents, GST implementation has been satisfactory. However, 30 per cent of the respondents are not satisfied. Regarding social-oriented schemes, the response has been very positive with more than two-third in favour, the report said.

The opinion is divided on resolution of NPAs in the banking system, with 38 per cent opining that implementation of policies is satisfactory, and 36 per cent feeling it is unsatisfactory.

The survey report said economic growth in the coming fiscal year could be hindered on account of slowdown in global economy, liquidity pressures in the banking system, elections and rising crude oil prices.

“More than 40 per cent of the participants think that liquidity pressures in the banking system, slowdown in global growth and elections would be risks for economic growth of India in 2019-20. More than 36 per cent indicate that rising crude oil prices and fiscal slippages might pose another threat for high economic growth. As per respondents, other risks pertain to employment generation (28 per cent), trade wars (23 per cent) and currency volatility (15 per cent),” media reports quoted the survey report.

“Forty per cent expect GDP growth for 2019-20 at around 7-7.5 per cent, while 29 per cent foresee it to be somewhere between 6.5-7 per cent, and 23 per cent people suggest that it would be above 7.5 per cent. On the whole, a little over 75 per cent expect it to be below 7.5 per cent,” the survey said.

Source: https://www.thehindubusinessline.com/media reports


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