India in context of IMF slowdown expectations

Posted by capitalstar04 on April 24th, 2019

IMF recently published it’s worldeconomicoutlook and basically they are expecting a slowdown. One year ago economic activity was accelerating at a good pace and it was projected to grow at 3.9% in 2018 and 2019.There was a drastic change in several things like US-China trade war, macroeconomic stress in Argentina and Turkey, BREXIT issue not being shorted out, tighter credit policies in China, and financial tightening and normalization of monetary policy in major developed economies have all contributed to a weakened global expansion.In Indian context 2019 Lok sabha election results which is scheduled to be announced on 23rd May will play a key role in growth and development of country, as various economic reform steps were taken by government in previous tenure. GST and Demonetization was a bitter pill taken and the outcome is yet to be reflected in economic growth. Traces of economic growth is already being seen but the real shining colour is yet to be spurt out. Many loans which were as NPAs were written off in previous several quarters and capital infusion by government in various PSU banks were also a good step taken towards betterment of economic conditions. Stock Market has been very volatile in recent days and volatility index IND VIX is hovering around in a higher trajectory. IND VIX is expected to remain same for next few months as election results and then budget will be like a trigger for the volatility.Inflation in recent past is being in constant check and low inflation is one of the greatest achievement by current Modi government. But lower inflation should not come at cost of development, as RBI’s major role is to maintain the rate of growth and also keep a check on inflation. In previous bi-monthly policy interest rate were reduced again and further easing of interest rates will not be easy now. Industrial growth has been slowed down and due to lower inflation farmer’s income has also not grown at a good pace. Jobs in informal economy has grown but several question has been raised on government on this issue. 

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