Moody’s also Reduced India’s GDP Growth Forecast for 2019 to 5.6 Percent
New Delhi: Moody's Investors Service lowered India's economic growth forecast for 2019 to 5.6 percent. Moody's said in a report on Friday that the slow growth rate of employment is impacting consumption. Moody's said that the growth rate will improve after this and it can be 6.6 percent and 6.7 percent in 2020 and 2021 respectively. However, even after the improvement, the growth rate will remain lower than before.
Moody's said, "India's economic growth rate has slowed down since mid-2018 and real GDP growth has fallen from around eight percent to five percent in the second quarter of 2019."
The growth rate fell further to 4.5 percent in the September quarter.
He said, "Consumption demand has slowed down and slow growth in employment has affected consumption. We expect growth to improve to 6.6 percent and 6.7 percent in 2020 and 2021."
Moody's said the government's measures like cutting corporate tax rates, recapitalizing banks, spending schemes on infrastructure, support to vehicles and other industries have not directly eradicated the problem of consumption demand.
Apart from this, banks have not extended the benefits of the policy rate cut by the Reserve Bank to consumers in a sufficient way.
Sales of commercial vehicles declined by 22.95 percent in the first six months of the financial year 2019-20 due to economic slowdown and liquidity crisis in the financial sector.
It is noteworthy that the Reserve Bank has also lowered the country's economic growth forecast from 6.1 percent to five percent last week citing soft demand and sluggish external demand. Apart from this, the International Monetary Fund has also reduced the country's GDP growth rate from 6.1 percent to 6.1 percent. The World Bank has also reduced this estimate to six percent.
The Asian Development Bank (ADB) has also reduced India's economic growth forecast for 2019-20 to 5.1 percent from 6.5 percent this week. Singapore's financial services provider DBS Banking Group has also lowered India's economic growth forecast from 5.5 percent to five percent in the current financial year.
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