Industry And Cluster | News & Insights

Economy Undergoing Cyclical, Not Structural, Slowdown: RBI Report.

Published: September 3, 2019
Author: TEXTILE VALUE CHAIN

‘Land, labour & marketing issues must be addressed to arrest broad-based downturn in some sectors’

The economy is undergoing a cyclical slowdown rather than a “deep structural” one, the Reserve Bank of India (RBI) said in its 2018-19 annual report. But it added that issues related to “land, labour and marketing” will need to be addressed as a broad-based downturn is underway in sectors such as manufacturing, trade, hotels, transport, communication and broadcasting, construction and agriculture.

“A decomposition of various seasonally adjusted indicators of economic activity, aggregate and sectoral, into trend and cyclical components suggests that the recent deceleration could be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural slowdown,” the central bank said, highlighting the slump in both rural and urban areas.

In its monetary policy review earlier this month, the RBI cut its growth projection for FY20 to 6.9% from its June forecast of 7%, citing weak domestic economic activity and a global slowdown amid trade tensions.

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