An interest rate cut by the Reserve Bank of India in its June monetary policy committee (MPC) meeting is not a solution to the weak economy, said Arvind Sanger, managing partner, Geosphere Capital Management.
“Focusing on the RBI and cutting rates and focusing on oil prices and going down are helpful factors but they do not offset if there is global growth. So our fears are more about the global macro and India specific macro story has also got serious issues,” Sanger said.
The gross domestic product (GDP) numbers for Q1FY20 should be worse than Q4FY19, he added.
“The economy is continuing to decelerate and oil prices going down are helpful. However, oil prices went down in 2008 and the Indian market didn’t do well. The oil prices going down because global growth is about to go off the rail is not good news for anybody including oil importing countries like India,” Sanger said.
India is not immune to global forces and global forces of slowing demand are never good for any economy, he said.
“The real hope here and the positive for India would be if we get strong actions by the new government. It’s the same government but with a new mandate and a stronger mandate and it should be able to take some serious action to turnaround dubious economic backdrop that India is experiencing right now,” Sanger added.