The decline in economic growth momentum in 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 Index of Industrial Production (IIP) to be moderated 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 that lower inflation is one of the indications for subdued demand. Currently, the election-related uncertainty is expected to weigh on the economic activity.
“Uplifting the domestic demand and resolving the issues in the strategic sectors like 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 the core inflation is likely to keep the overall inflation low.
However, rising oil prices coupled with strengthening of El Nino conditions might impact the rainfall during June and July, which are the sowing months of the Kharif crop, are likely to create inflationary pressures for the non-core segment.
D&B expects the 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.