INDIA’S GDP GROWTH DROPPED TO 2.5% FROM 5.3% -MOODY’S

INDIA’S GDP GROWTH DROPPED TO 2.5% FROM 5.3% -MOODY’S

INDIA'S GDP GROWTH DROPPED TO 2.5% FROM 5.3% -MOODY'S

For the year 2020, the earlier estimate made by Moody's Investor Service of 5.3 of India's growth forecast for the economy has been reduced to 2.5% in the middle of the amplifying cost of the coronavirus pandemic.

The bounce-back of the growth cycle to 5.8% is expected in the following year of 2021 and at the global level, the GDP (Gross Domestic Product) which at present is at a negative 0.5% expectation will be bouncing to a recovering room in CY21.

Moody stated that India will face a heavy downward curve in the incomes according to the 2020 growth rate, following to which the pace of recovery will sit to the line by 2021 taking of the weight of the domestic demand contrary to the 5% growth in the previous year 2019.

"The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-day lockdowns. We expect these measures to dampen economic growth in both countries this year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next year," shared Moody's at the Global Macro Outlook.

"In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors," it said.

Looking at the present scenario, with the growing cases of coronavirus and the predictions of the funds it may require, on Thursday announced that the relief package will be of 170,000cr. And focused on concessions from the government, food transferring at no cost, cash allotment for the vulnerable section of the society, schemes aimed at helping those who are battling on the frontline to fight the pandemic.

Finance minister Nirmala Sitharaman had on Thursday announced a Rs 1.7 lakh crore package for the poor, including cash transfers, free food grains and cooking gas. "Since many European economies are contracting, India showing positive growth, even of 2.5%, is still positive news, although the actual outcome will depend on how quickly the impact of Covid-19 is overcome," said DK Srivastava, chief policy advisor at EY. "Most important would be a large fiscal stimulus package to supplement the monetary policy that was announced."

India already facing the credit availability issues will face should be ready to face a dampened economic growth according to Moody's because of the several liquidity constraints across banks and non-bank financial sectors.

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