Moody’s Slashes India GDP Growth From 5.3% to 2.5% in 2020

A Moody’s sign is displayed on 7 World Trade Center, the company’s corporate headquarters in New York. Image used for representation.

(Photo: Reuters)

Moody's Investors Service on Friday, 27 March, slashed its estimate of India's GDP growth during 2020 calendar year to 2.5 percent from an earlier estimate of 5.3 percent, on account of the rising economic cost of the coronavirus pandemic.

This compares to 5 percent growth in 2019.

Moody's said, at the 2020 estimated growth rate, a sharp fall in incomes in India is likely, further weighing on domestic demand and the pace of recovery in 2021.

"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.

Earlier in March, it slashed India's growth forecast to 5.4 percent for 2020 from 6.6 percent projected earlier on slower than expected economic recovery.

In its update on Global Macro Outlook, Moody's said India's economy has decelerated rapidly over the last two years and expects economic recovery to begin in the current quarter. We expect any recovery to be slower than we had previously expected.