New Delhi: Lower lending rates following a
series of policy rate cuts by the Reserve Bank of India and a sharp cut
in the corporate tax rates will spur a recovery in India next year, a
report said on Monday.
"The turnaround is likely to show up
beginning in the October-December quarter, though largely because of a
low base in the year-earlier period. A genuine recovery should start in
2020," Bloomberg global outlook report said on Monday.
also said that the gross domestic product growth is expected to rise
sharply in fiscal 2021 ending in March, to 7.1 per cent, from an
estimated 5.7 per cent in fiscal 2020.
However, the growth may remain flat at 5 per cent in the second quarter of fiscal 2020 ending in September.
report further said that "by next year, rural incomes should rise" and
"good rainfall and government income support is expected to boost
farmers' income and drive rural consumption".
factors like the government's decision to infuse capital into
public-sector banks and the central bank's measures to revive
non-deposit-taking financial companies should help strengthen India's
financial system, the report said.
The RBI's transfer of surplus capital reserves to the government also creates more leeway to increase fiscal spending, it added.
government lowered the corporate tax rate in September for existing
companies to 22 per cent, from 30 per cent, and for new manufacturing
companies to 15 per cent from 25 per cent.
Besides, the report
said: "We expect average inflation to rise to 4.3 per cent in the fiscal
third quarter of 2020, from 3.5 per cent in the second quarter. Beyond
that, inflation should drop to an average 3.8 per cent in the fiscal
fourth quarter of 2020 and 3.5 per cent in the first quarter of 2021."