A month after India posted its strongest GDP growth in five years, analysts say the country will struggle to keep up with the surging appetite for imported goods.
The Reserve Bank of India on Thursday cut its growth forecast for 2018 to 6.5 per cent from 7 per cent, saying India will struggle in the post-recession recovery period to make up for the slower pace of growth in the economy as well as slower population growth.
Analysts said the latest forecast, which excludes the effect of the Goods and Services Tax (GST), will likely be the last one of 2018.
The RBI cut its forecast to 7 per on Wednesday after the Reserve Bank lowered its forecast in March.
Analytics firm BSE Sensex Index for March rose by 2.1 per cent to 4,074.07.
The rupee weakened by 50 paise to 1.984 against the dollar and the rupee gained to 57.7 paise from 56.3 paise.
In a note to clients, the RBI said that the country had the potential to experience an “extraordinary economic recovery” if it took the right actions.
The growth rate in India was 1.7 per cent in March, its slowest since January 2016.
It is expected to slow to 0.5 to 0,7 per in 2019.
The country’s gross domestic product grew 6.3 per cent year-on-year in the March quarter, according to data from the Bureau of Statistics.
India’s trade surplus narrowed to $2.4 billion, down from $2 billion in March last year.
The rupee is down by half a cent against the greenback against the U.S. dollar this year, but it is still more than 50 per cent above the U, S and Euro currencies.
India has been the world’s biggest importer of goods, with exports of $3.3 trillion last year, according the International Monetary Fund.