Rating agency Crisil Ltd has pared down India’s growth estimate for 2019-20 by 20 basis points to 6.9%, even lower than the International Monetary Fund estimate of 7%.

“The revision factors in a triangulation of downside risks: inadequate monsoon, slowing global growth, and sluggish high-frequency data for the first quarter. The slowdown would be pronounced in the first half, while the second half should find support from monetary easing, consumption and statistical low-base effect," Crisil said in its India Outlook titled “Uphill Trek".

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) for July released on Thursday showed a slight improvement to a two-month high at 52.5. A figure above 50 indicates expansion, while a reading below signals contraction.

The eight infrastructure sectors averaged 3.6% growth in the April-June period, while exports contracted 1.7% during the same period. Gross domestic product (GDP) growth in India in the March quarter slowed more than expected to 5.8% from 6.6% in the December quarter. This was the slowest quarterly GDP growth in five years. Annual GDP growth slowed to 6.8% in the year ended 31 March from 7.2% in the previous year.

Since last month, the Reserve Bank of India (RBI), the Economic Survey of the finance ministry, and the Asian Development Bank have cut their growth outlook for India to 7%.

“Most consumption segments will pull revenue growth down into single-digit this fiscal. And weak prices of commodities such as steel and crude oil would exacerbate the pain. Also, corporate revenue is set to grow at a slower 7.5-8.0% this fiscal year, reversing the trend of double-digit growth in the past two fiscal years. Given the fiscal constraints, public spending is unlikely to have the heft to pull growth above 7%," Crisil said in its report.

There would be some near-term onus on monetary policy to stimulate growth, the agency said. “But how effective that can be is the big question," it added.

The RBI cut policy rates for the third consecutive time in June by a cumulative 75 basis points and is expected to cut rates yet again next month, given the benign inflation trajectory. The US Fed cutting policy rates for the first time since 2008 by 25 basis points is likely to put the onus on the RBI for further monetary easing.