India’s top economists have predicted that the current economic slowdown has “nearly bottomed out”.
But economists have nevertheless cautioned that despite the promising numbers, a sustained economic recovery will take time to shape up and could take between two to six quarters to fully materialise.
The survey was conducted by country’s top industry body FICCI among economists belonging to the industry, banking and financial services sector.
“Positive signals including de-escalation of US-China trade tensions, early resolution and a lower possibility of a no-deal BREXIT, accommodative monetary policy stance by central banks globally and better fiscal stimulus and policy support through 2019 will work together to uplift growth in 2020,” the survey said.
Currently, the Indian economy is facing an uphill task to reverse the trend of falling growth and lower tax revenues.
Government data suggests that prior to 15 January, $54.5 billion were collected in corporate tax against a target of $108 billion for the current financial year. Similarly, on the personal income tax front, $46 billion were collected, lagging behind the budget target of $80 billion for 2019-20.
Citing weak consumption demand as a major impediment to India’s growth, economists cautioned government against any modification in sales tax rates to improve revenue collections as this could prove to be counterproductive.
Economists have recommended undertaking expansionary fiscal and monetary policies along with a slew of reforms to tackle the structural problems facing the Indian economy.
India’s economic growth has been on a slide with the latest numbers for second quarter (July-September 2019) dipping to a six-year low of 4.5 percent. The slowing growth on the back of both domestic and external factors is a cause for concern for the government ahead of the annual budget which is due on 1 February.