India’s growth premium over the emerging economies (EMs) is likely to touch a seven-year low mark in 2019-20 (FY20), an 18-year low, according to the data released by the International Monetary Fund (IMF). It will drop to 0.1 per cent, expected to be the lowest since 2012-13.
On the other hand, the gross domestic product (GDP) in India is expected to grow by 5 per cent in FY20, against 3.9 per cent growth in EMs in the calendar year (CY) 2019.
The growth rate of India is lowest compared to the other growing economies like Europe, United States, Japan.
The economic analysts have repeatedly raised the issues related to slower demand growth in India and inflation as they express worries over falling Indian economy. They are claiming it can affect the capital inflows which plays a crucial role in sustaining the country’s economy.
Managing Director of Paribas Manishi Raychaudhuri said, “ For 2.5-3 per cent depreciation every year is fine. But if it goes beyond that, like in 2013, or during the Infrastructure Leasing & Financial Services (IL&FS) crisis, that is when we have a problem.”
Even foreign investors prefer the stable economy of any country in which they want to invest as it is important for currency regime.