Reserve Bank of India (RBI) on Monday said that slowdown was deepening in the Indian economy as the main indicators of growth showed significant moderation in a report prepared by the banking regulator. ‘Macroeconomic outlook of the Indian Economy’, based on various business expectations surveys, continues to exhibit the persistence of less than normal sentiments’, said the bank in its quarterly Macroeconomic and Monetary Developments report released on Monday evening.
The professional forecasters’ survey conducted by the bank in December 2008 suggested further moderation in economic activity in 2008-09. ‘As reported by the respondents, the downside risks to growth seem to have amplified due to the projected global economic recession, deterioration in global financial markets and slowdown in domestic demand. The knock-on impact of the global downturn is visible as the main drivers of the growth process in the Indian economy have moderated during the third quarter of 2008-09’ said the bank.
The business expectations survey conducted by the central bank showed that the optimism for the quarters January-March 2009 and April-June 2009 based on major business sentiment indicators such as overall business situation, overall financial situation, production, order books, capacity utilisation, employment, exports, imports and profit margin significantly declined as compared to a year ago.
India’s growth trajectory has been hit hard by the ongoing economic slowdown and the capital outflows, sharp decline in exports and worsening sentiments have started telling on the actual economic expansion. Quarterly growth slowed down to lowest in more than five years in the three months ending December 2008 and most economists see the growth going further down for at least two more quarters before recovering.