India Ratings, following IMF, cuts GDP growth forecast

Economist Sunil Sinha of India Ratings & Research said, 'The Indian economy is looking at a cycle of low consumption and weak demand.'

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After the International Monetary Fund (IMF), another rating agency has slashed the GDP growth estimate of the Indian economy. India Ratings & Research (Fitch Group) has projected India’s GDP growth to be just 5.5% in this fiscal year 2020-21. However, this is much higher than the IMF estimate of 4.8% and the Government of India National Statistics Office’s 5%.

The rating agency of the Fitch Group says that the factors of slowing down of the Indian economy do not seem to be going away in the near future and the government should invest in the budget in a way that generates employment and increases the expendable income of the people.

Earlier, the agency felt that there would be some improvement in this financial year, but the Indian economy is stuck in a period of low consumption and low investment demand. The growth rate in 2018-19 was 6.8%, which means there is a decline of about 1.8%. All the world’s rating agencies and the International Monetary Fund have also drastically reduced India’s GDP estimate.

Economist Sunil Sinha of India Ratings & Research said, “We expected some improvement in FY 2021, but there is a risk that the Indian economy is looking at a cycle of low consumption and weak demand.”

The International Monetary Fund has lowered the GDP growth rate estimate for the current fiscal for India to 4.8%. The growth forecast of the world has had to be reduced due to sluggishness in India and other emerging countries like it. Earlier, the IMF had released an estimate of 6.1% growth in the current financial year. Whereas the IMF had estimated 7.5% in the same period a year ago.

Moody’s has reduced its gross domestic product (GDP) estimate for the fiscal year ending March 2020 from 5.8% to 4.9%. Fitch has predicted a growth rate of 4.6% for FY 2019-20. It has predicted 5.6% for 2020-21 and 6.5% for 2021-22.

India’s economic growth rate declined to just 4.5% during the July-September, 2019 quarter, which is a six-and-a-half-year low. This is the sixth consecutive quarter when sluggishness has been recorded in GDP.

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