Moody's reduced India's growth rate to 5.9% for 2019.

Moody's reduced India's growth rate to 5.9% for 2019.

New Delhi: Moody's Investors Service has slashed India's growth rate for the year 2019. Now Moody's has reduced India's economic growth forecast to 5.6 per cent. Moody's said in a report on Friday that the slow growth rate of employment is impacting consumption.

 

Will improve in 2020-2021

Moody's has said that the growth rate will improve after 2019 and it may be 6.6 percent and 6.7 percent in 2020 and 2021 respectively. However, the growth rate will remain lower than before even after the correction. He said that we have reduced India's gross domestic product (GDP) growth forecast for 2019 to 5.6 per cent, down from 7.4 per cent in 2018. Moody's said that India's pace of economic growth has slowed down since mid-2018 and real GDP growth has fallen from around eight per cent to five per cent in the second quarter of 2019. The growth rate fell further to 4.5 per cent in the September quarter.

Sluggish consumption demand and slow growth of employment have impacted.

He said that 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 on infrastructure, supporting vehicles and other industries have not directly eradicated the problem of consumption demand. Further, banks have not extended the benefits of policy rate cuts by the Reserve Bank to consumers in a substantial way. Commercial vehicle sales declined by 22.95 per cent in the first six months of FY 2019-20 due to economic slowdown and liquidity crisis in the financial sector.

Reserve Bank and IMF have also reduced the growth rate.

The Reserve Bank also lowered the country's economic growth forecast from 6.1 per cent to five per cent last week, citing soft demand and sluggish external demand. Apart from this, the International Monetary Fund (IMF) has also estimated the country's GDP growth rate from seven percent to 6.1 percent. World Bank has also reduced this estimate to six per cent. The Asian Development Bank (ADB) has also projected India's economic growth rate for 2019-20 to be down to 5.1 per cent from 6.5 per cent this week. DBS Banking Group, a Singapore-based financial services provider, has also lowered India's economic growth forecast from 5.5 per cent to five per cent in the current financial year.