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Will 2019 be better for India's growth story? Here's what experts have to say

Updated : December 28, 2018 21:04:03 IST

India steps into the New Year with many strengths and challenges. Crude oil is down, so is the current account deficit (CAD). But the intensely challenging general elections ahead is set to worsen the fiscal deficit. How will all this impact growth?

An exclusive CNBC-TV18 poll of economists indicated that despite the political overhang, GDP growth in 2019 is expected to be stronger than in 2018. The rupee will be stable around the 69-72 mark, said a bulk of the respondents. The Reserve Bank of India (RBI) will have more headroom to cut rates not just once, but may be twice.

CNBC-TV18 caught up with Haseeb Drabu, economist; Suyash Choudhary, head - fixed income, IDFC MF and Tarun Ramadorai, professor-Fin Economics at Imperial College Biz School and chairman of Household Finance Committee to understand the undercurrents of 2019.

Drabu said, "2019 being an election year will see lot of uncertainty. I am not seeing a recovery of the kind that one expects. But there will be some good headwinds coming up like GST will stabilise, demonetisation effect will get further streamlined and you will have those kinds of headwinds. From a macro perspective in terms of public expenditure policy, growth and public policy, I am not very confident that 2019 will be a good year, it's going to be a stressful year and an uncertain year."

"While US was still responding to a late cycle fiscal stimulus, the rest of the world probably led by China was showing adequate signs of slowdown. Over the last couple of months, it looks like this phase is now gradually giving way to a synchronised slowdown, which means that finally at least parts of the US economy are beginning to show some deceleration. So, if you look at housing, auto and business fixed investments, there seems to be some slowdown," Choudhary said.

"There are huge headwinds for the global economy in the next year. When you are looking at the US versus China, the sort of incipient trade war that we are seeing, it seems it's is a very worrying development. We would like to think that wiser heads will prevail and people will calm down the rhetoric and it won't actually be backed up by a lot of real actions. So, there is uncertainty as a result of that and then we have got Brexit as well," Ramadorai said.
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