HomeEconomy News5% GDP growth not a dire situation, says Taimur Baig of DBS Group

5% GDP growth not a dire situation, says Taimur Baig of DBS Group

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By CNBC-TV18 September 6, 2019, 12:26:52 PM IST (Updated)

5% GDP growth not a dire situation, says Taimur Baig of DBS Group
Taimur Baig, MD and Chief Economist at DBS Group Research, on Friday said that India's growth slipping to 5 percent

in the first quarter should not be seen as a dire situation as it "is doing pretty well on a relative basis".

“Given the dearth of growth around the world, even the April-June quarter number of 5 percent should not be seen as a dire situation. India is doing pretty well on a relative basis. It is only doing poorly relative to India’s own aspirations and goals,” said Baig in an interview with CNBC-TV18.

Speaking about government spending, Baig said, “The spending crunch will come from a variety of sources. One is, of course, the weakness in revenue. Expectations are that some of that weakness can be offset by the transfer that is coming from the RBI. However, nonetheless, going forward, it will be very difficult for the government to reach its fiscal target because of the communication that has been set out so far that they remain committed to the deficit target.”

On the private consumption space, he said, “Consumption is a very slow-moving variable. You cannot turn it up and down just like that. So, the fact that it has slowed after many years of showing robust growth is a source of deep concern for me. In all the years that I have covered India, I have never seen volume growth on essentials look so weak and that is indeed a source of concern.”

“We are seeing fairly rare malaise in consumption that we have not seen before and therefore I do not think there is a magic bullet out there. Having stayed strong for so long, now that it has slipped, other than some seasonality related factors, I cannot see a major turnaround in consumption in the immediate future,” he added.

Baig said that the government’s recognition of slowdown is a positive development. “The recognition that contra-cyclical policies are needed beyond monetary easing itself is a positive development. We have seen that play out in the last couple of months.”
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