Economic Distress Are Expected To Strike In The New Year
The upcoming year 2018 is the most challenging year ahead of the 2019 Lok Sabha elections for the Modi Government, in terms of development, employment enhancement, and the abolition of corruption. Elections will be held in May 2019. In it, the government will have to show the report to the voters based on the agenda declaration before the election and the current development situation.
Let’s go through some of the estimation based on the trending work cycle.
Growth will be lower than 7%
With the ban on large value currency in April–June 2017 quarter, the GDP growth was 5.7% in three years. In the July-September 2017 quarter, it witnessed percentage with minor recovery. GDP growth was more than 7% amid 2003–2004 to 2011–2012. This depicts that the economy is not performing according to the capacity. In fact, the estimates for the financial year 2018 and 2019 have been claimed to increase the economy.
Economic recovery will continue to remain
International rating agency Moody’s, which raises the sovereign rating of India since more than a decade, says the fiscal year ending in March next year will increase 7.5% in 2018 and 7.7% in 2019. The US Bank Goldman Sachs has said that growth in 2018 will be 6.4%, but it will reach 8% in the next financial year. Bank of America Merrill Lynch, Morgan Stanley, Nomura, Fitch, International Monetary Fund (IMF), Crisil, and Asian Development Bank have estimated 6.7 to 7.5% growth in FY10. For the financial year 2019, these agencies have given estimates of GDP growth of 7.3% to 8%. This means that in 2018, the condition of the economy will be better than this year.
Financial Hazards Threat to Economy
Recently, the government declared an additional loan of Rs 50,000 Crore. This has increased the risk of the deficit of fiscal deficit to 3.2% in the fiscal year 2018. It will also be expensive to take a loan from the bond market. It also means that the scope of the loan will be reduced for the Reserve Bank to ease. Companies increase investment when loans are cheaper thereby, increasing the economy.
Crude oil is now close to $66 a barrel. It is estimated to reach $70. If this happens then it will increase the inflation rate and the burden of subsidy on the government will also increase. Apart from this, in the case of cheaper loans, the Reserve Bank will hold its hands.