India’s economy is likely to grow at 4.3 per cent in last quarter of 2019 amid concerns over crisis involving non-banking financial companies (NBFC), according to Nomura, which said 2020 first quarter will see a ‘weak’ uptick in gross domestic product (GDP) growth at 4.7 per cent. Contrary to optimism that growth has likely bottomed, Nomura believes it will slide further.

“Domestic credit conditions remain tight as market concerns in the shadow banking (NBFC banking) have persisted too long,” a report quoted Sonal Varma, Chief Economist for India and Asia at the Japanese financial services company, as saying.

Nomura expects 4.9 per cent GDP growth in 2019, down from an earlier estimate of 5.3 per cent, and 5.5 per cent in 2020 against an earlier projection of 6.3 per cent. In 2021, it sees India’s economic growth at 6.5 per cent. “On financial year basis, we expect GDP growth of 4.7 per cent in FY20, and 5.7 per cent in FY21, suggesting a delayed recovery and below-potential growth through end 2020,” Varma said in Singapore.

The Reserve Bank of India is likely to slash key policy rates in the second quarter of 2020. However, the burden of growth heavy lifting now seems to be shifting to fiscal policies, she wrote in Nomura report ‘Asia 2020 Outlook’. Moreover, the Central Bank will stay in pause mode in February 2020 as well, according to the report.

Nomura remains concerned about growth prospects, saying cyclical factors that were responsible for the slowdown look to persist well into 2020. Moreover, the current phase of slowdown comes in the middle of a broader downturn in trend since 2016, driven by a slump in investments and employment opportunities.