Rating agencies slash India growth forecast

Moody’s Investors Service on Tuesday slashed India growth forecast for 2020 to 0.2 per cent. Earlier this year, it had cut its projections from 5.2 per cent prior to lockdown to 2.5 per cent when the lockdown was announced in March. Moody’s expect G20 advanced economies to see a fall in GDP by four per cent in 2020. Another rating agency, India Ratings & Research has also slashed its estimate for India’s gross domestic product (GDP) growth rate to 1.9 per cent for 2020-21. 

Slashing GDP growth rate is a result of nationwide lockdown that has brought many economic activities to a standstill. With most people confined to their homes, there is no consumption other than essentials. This has hit many industries like entertainment, real estate, hospitality and retail. Coronavirus is a health emergency. However, it has led to a severe blow to trade and commerce too. This is a rare situation for India and the world at large. Normally with economic slowdown, the government tries to stir up the economy with monetary packages which commonly lead to increased consumption thereby, helping the economy bounce back. However, this time, India’s consumption story is also taking a hit with the lockdown. The economy cannot function to its full potential until there is a cure of the virus or signs of it vanishing as many experts believed with summer weather.