India will struggle to revive growth quickly
Monday, February 10, 2020
Subject
Outlook for India's economy following the 2020/21 budget.
Significance
Prime Minister Narendra Modi’s government estimates that GDP growth for fiscal year 2019/20 (April-March) will be 5.0%, the lowest full-year rate in eleven years. Finance Minister Nirmala Sitharaman earlier this month presented a budget for 2020/21 and said growth would pick up to 6.0-6.5% in that year.
Impacts
- Further widening of the fiscal deficit could prompt credit rating agencies to downgrade India’s outlook.
- Some states may try to reclaim powers of taxation that they surrendered when the Modi government introduced the Goods and Services Tax.
- Modi will double down on efforts to promote the ‘Make in India’ initiative, which is designed to increase domestic manufacturing.
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