Days after the IMF said that the Indian economy needs urgent reforms, Moody’s cut growth projection to 5.4 per cent in 2020. The global rating agency had earlier projected the economy to grow at 6.6 per cent on account of slower than expected growth recovery. The rebound may begin in the current quarter, Moody’s said in its Global Macro Outlook update. IMF, last week said that the economy needs urgent structural and financial reforms on account of rising debt levels. Moody’s has projected the Indian economy to grow at 5.8 per cent for 2021 down from 6.7 per cent earlier.
The Indian economy is seeing a growth slowdown for some time now on account of both domestic and global factors. The government has announced a slew of measures in the past few months to boost the sluggish economy.
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Even in budget 2020, Finance Minister Nirmala Sitharaman announced fresh reforms to prop up the slowing economy.
Moody's said that weak economy and muted growth in credit are making it difficult for a quick rebound to happen, even if economic slowdown may have touched bottom. Sharing its views on the fiscal scenario, Moody's said that the budget didn't have enough stimulus to address the slump in demand. The tax cuts are not likely to translate into higher consumer and business spending when risk aversion on a new high, Moody's said citing results from the similar policies in other nations. The first GDP advance estimates by the government showed that the Indian economy is expected to grow at 5 per cent in FY20. In Q3FY20, the GDP grew just at 4.5 per cent on account of sustained slowdown and demand slump.