In another setback to the Indian economy, Moody’s Investors Service on Thursday slashed its 2019-20 GDP growth forecast for India to 5.8 % from 6.2 % earlier. It said that the Indian economic slowdown was experiencing a pronounced slowdown which is partly related to long-lasting factors.
The projection, according to news agency PTI, is lower than 6.1 % that the Indian federal bank Reserve Bank of India predicted only last week. Moody’s said, “The drivers of the deceleration are multiple, mainly domestic and in part long-lasting.”
It added, “Although we expect a moderate pick-up in real GDP growth and inflation in the next two years, we have revised down our projections for both. Compared with two years ago, the probability of sustained real GDP growth at or above 8 per cent has significantly diminished.”
This comes just days after the Asian Development Bank and the Organisation of Economic Co-operation and Development too lowered their forecast for 2019-20 for India to 6.5% and 5.9%, respectively.
In August this year, the Centre’s Narendra Modi government faced a real crisis in its hands after the GDP data for the first quarter of the financial year 2019-20 showed the economy grow by just 5%. This was less than 5.8% quarterly growth registered in the last quarter of the previous financial year and 8% that the Indian economy registered in the first quarter of the last financial year.
Last month, when Prime Minister Narendra Modi’s Economic Advisory Council was reconstituted, it dropped National Institute of Public Finance and Policy member Rathin Roy and Brookings Institution member Shamika Ravi. Both had raised concerns on the government’s fiscal policies and the health of the Indian economy in the recent time.