India may lose fastest growing economy tag: Analysts

India might lose its tag of the fastest growing economy in the world to China if the opinion of the economists is to be believed.

A survey of top economists reveals an almost unanimous opinion that the Gross Domestic Product (GDP) growth in India for the fourth quarter of 2018-19 is likely to be below the growth in 2018-19.

Of the 12 economists consulted, only one is of the opinion that GDP growth numbers would be 6.5% -- 10 basis points (bps) more than that of China's 6.4% growth rate. They have given a high probability of the GDP growth numbers to be below the psychological 6% mark.

The average of all the GDP growth numbers suggested by the economists stands at 6.05%, which is 36 basis points lower than that of China.

Weak monsoons along with sustained high-interest rates, weak rural demand and reduced space for government expenditure seem to weigh on GDP growth prospects, according to experts.

"A drop in both cereals and horticulture is contributing to the agri slowdown. We await the results of the 3rd update of the 2019 rabi (winter) crop harvest, which has been late to arrive in markets," said Saugata Bhattacharya, Chief Economist, Axis Bank.

Many others like Arun Singh of Dun & Bradstreet don't see a turnaround in the economy in the first quarter of the current financial year -- owing to multiple reasons such as budget uncertainty and the crisis in the shadow banking.

Earlier, the Reserve Bank had lowered its economic growth forecast for 2019-20 fiscal year beginning April to 7.2%.

The central bank's monetary policy committee (MPC), which has cut policy rates by 50 basis points this year, is expected to cut the repo rate by further 25 basis points at its June 4-6 meeting, bringing it to 5.75%, the lowest since July 2010. The apex bank is also expected to come up with a Cash Reserve Ratio (CRR) cut from the existing 4%.

China, in the quarter ended March, had clocked the growth of 6.4%, a first in the past one and a half years.

According to market analysts, the uncertainty over GDP numbers contributed to the outflow of foreign investors from the Indian markets in the previous two trading sessions. On Tuesday and Wednesday, the FIIs withdrew a net of Rs 800 crore from the Indian markets. "There is a factor of uncertainty over GDP numbers in our mind. So we pulled back," a senior executive from one of the FIIs told DH, on condition of anonymity.

However, on Thursday, FIIs returned to Indian markets, parking a net of Rs 1,664.74 crore in the markets.