Budget may address issues in sectors to support growth

The government is expected to initiate measures like uplifting domestic demand, addressing issues in strategic sectors like aviation and power in the upcoming budget to support domestic growth momentum, says a report.

According to Dun & Bradstreet's Economy Forecast, the moderation in domestic growth momentum has increased expectations that the government will initiate measures in the Union Budget 2019-20 to support growth.

As the world is witnessing synchronised slowdown on the economic front, it would not be an easy task for the government to uplift domestic growth, Dun & Bradstreet India Chief Economist Arun Singh said.

"It would be thus crucial to identify the growth centres and prioritise the flow of funds given the funding constraints faced by both the government and the private sector," Singh added.

In the last fiscal, the Indian economy grew at a 5-year low pace of 6.8 per cent.

The report noted that the government is likely to take measures to uplift domestic demand, to resolve issues in strategic sectors like aviation, power, and non-banking financial companies, to boost investment demand as new investment from the private sector has not picked up.

Moreover, the government also has to address its fiscal constraints.

D&B expects growth in the Index of Industrial Production (IIP) to remain subdued given the slowdown in demand, both in urban and rural segments and lack of new investment from the private sector.

According to D&B, IIP is likely to have grown by 3-3.5 per cent during May 2019.

On the prices front, the reversal in food prices is expected to provide upward pressure to inflation, while moderation in demand and low crude oil prices are likely to keep it subdued, the report said.

D&B expects CPI inflation to be in the range of 3-3.2 per cent and WPI inflation in the range of 2.2-2.4 per cent during June 2019.