Thursday (October 10): Moody’s Investors Service has cut its growth forecast today for India to 5.8% from 6.2% for the fiscal year 2019-20.
It has said a weaker growth outlook will dampen the prospects for fiscal consolidation.
The ratings agency had lowered India’s growth forecast to 6.2% from 6.8% in August.
“Compared with only two years ago, the probability of sustained real GDP growth at or above 8% has significantly diminished,” the global ratings agency said in a note.
India’s growth fell to a six-year low of 5% in the April-June quarter led by weak demand for consumer products and stress in the financial sector, prompting the central bank to cut its 2019-20 growth forecast to 6.1% last week from 6.9%.
Moody’s forecast Asia’s third-largest economy would grow 6.6% in fiscal 2020/21 starting next April.
The agency expects the government to run a fiscal deficit equivalent to 3.7% of gross domestic product this fiscal year, compared with the government’s target of 3.3%, following New Delhi’s decision to cut the corporate tax rate, which will cost about 1.5 trillion rupees in tax revenues.
It also said that a long period of weak growth will hamper the government’s fiscal consolidation plans.
