Macro Forum: The Street View


India Image

In India, real GDP growth forecasts posted a marked slowdown in 2019 at 5%, from c.7% in the previous two years. Headline inflation rose from 3.3% in the first half of 2019 to 7.4% in December, driven by food prices. The government’s 2020 budget has shown a timely recognition of current challenges, with a reduction in how quickly and by how much it plans to reduce the fiscal deficit. Spending pledges and corporate tax cuts stand at Rs.27.5 trillion (c.US$400 billion) in 2019-20, nearly 20% higher than the provisional estimates for 2018-19.

Accommodative fiscal policy is further supported by the central bank, which announced a 110 basis point cut to the repo rate. However, risk aversion and high levels of bad debt in the banking sector are likely to continue to impede lending, somewhat restraining consumption and investment growth.

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
GDP* 5.6% 5.1% 4.7% 3.1%
Inflation 3.18% 3.99% 7.35% 5.84%


Real GDP Growth

Source: International Monetary Fund

India FX vs FV

Source: Bloomberg Spot Price and Actis methodology for Fundamental Value


Source: International Monetary Fund