Poll cloud keeping economy down, says report

PTI New Delhi | Updated on April 29, 2019

The decline in the economic growth momentum in the October-December quarter of FY19 is likely to continue, largely owing to election related uncertainty, says a report.

According to Dun and Bradstreet’s (D&B) latest Economy Forecast, subdued consumption demand and election related uncertainty is expected to weigh on India’s industrial production.

D&B expects the Index of Industrial Production (IIP) to moderate by 1.0-1.5 per cent during March 2019.

“There are concerns that the dip in the growth momentum in Q3 FY19 is likely to continue given the headwinds in the global economy and the various domestic issues,” said Arun Singh, Lead Economist, Dun & Bradstreet India.

Singh further said lower inflation is one of the indications for subdued demand. Currently, the election related uncertainty is expected to weigh on the economic activity.

“Uplifting domestic demand and resolving issues in strategic sectors such as aviation, power and banking and non-banking financial companies becomes imperative as risks from slowing global economic activity and trade can be difficult to circumvent,” Singh said.

On the prices front, the report said while there is a reversal in rates of some food articles, moderating inflation in some segments under core inflation is likely to keep overall inflation low.

However, rising oil prices coupled with the strengthening of El Nino conditions might impact rainfall during June and July, the sowing months of the kharif crop, which are likely to create inflationary pressures for the non-core segment.

D&B expects CPI inflation to be in the range of 2.7-2.9 per cent and WPI inflation to be in the range of 2.8-3.0 per cent during April 2019, respectively.

Published on April 29, 2019

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