India’s GDP will grow 5% in the year through March 2020, the lowest since 2013, according to government numbers.
Weighed down by a drop in consumer spending and corporate investment, a shadow banking crisis, and bad loans at banks, India’s economic growth is now behind China, Vietnam, and the Philippines in the region.
The IMF is also set to cut its forecast for India this month after estimating a 6.1% growth rate previously.
Poor business sentiment and declining rural consumption are among reasons for weakness in the economy, the IMF’s Chief Economist Gita Gopinath said last month.
India’s budget deficit might widen to 3.8% of GDP in the current fiscal year, breaching a target of 3.3%, according to a report by Bloomberg.
The report cited an anonymous official as saying that the country’s law allows the government to surpass the target by as much as half a percentage point.
The government is also allowed to miss its target in the face of various situations such as wars, a collapse of farm output, and structural economic reforms, the report added.
India has already breached its deficit goals by 1 percentage point in the last fiscal year and 3 percentage points in the year before.
The country’s Finance Minister Nirmala Sitharaman will announce the annual budget on Feb 1, 2020.