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INDIAN ECONOMY IS EXPECTED TO GROW IN 2019

World Bank is expecting a rise in India’s GDP in the fiscal year 2019-20. With improved performance in export and consumption expenditure the GDP can accelerate to 7.5% from 7.2% in the year 2018-19. In the first three quarters, Industrial growth increased to 7.9%, agricultural growth to 4% and fixed capital formation and exports accrued and made good contributions. Inflation statistics has been low-keyed in FY19. With all this positive contributions continued by positive investment from different sectors, India’s GDP is likely to increase. Inflation is likely to come towards 4% and both current account and fiscal deficit are expected to narrow. Improvement in export performance, low oil prices accompanied by consequent appreciation in Rupee has helped to reduce inflation and can bring reduction in current account deficit to 1.9%. Fiscal deficit can also reduce to 6.2% in this fiscal and another 0.2% in the following year. As there is no change in the centre’s deficit which remains intact at 3.4%, the adjustments in budget is rest on states, according to World Bank. RBI’s decision to reduce repo rate by 25 basis points will also help to improve the economic conditions. Moreover, with Fed signaling a slower pace of normalization, rupee has appreciated against dollar and created a healthy run.