State Bank of India's economic research team, in the latest edition of 'EcoWrap' has sharply cut India's Gross Domestic Product (GDP) forecast for FY2020 to 5% from 6.1%. It also noted that it expects Q2 GDP growth at 4.2%. The acceleration rate for 33 leading indicators at 85% in October 2018 is down to just 17% in September 2019, with such decline gaining traction from March 2019. The bank expects growth rate to pick up pace in FY21 to 6.2%.
The report notes that domestic growth trends in FY20 should be looked through the prism of synchronized global slowdown and larger rate cuts could be expected from RBI in December policy. However such rate cut is unlikely to lead to any immediate material revival, rather it might result in potential financial instability.
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