Moody’s Cuts India’s GDP Growth Forecast To 5.6% For 2019-20

News:Moody’s Investors Service has reduced India’s economic growth forecast to 5.6% for 2019 from 5.8% projected earlier.


  • The growth forecast has been reduced due to investment-led slowdown that has broadened into consumption,driven by financial stress among rural households and weak job creation.
  • To overcome the growth slowdown,the government has undertaken a number of measures.
  • It has announced a cut in the corporate tax rate to 22% from 30%.It also lowered the tax rate for new manufacturing companies to 15% to attract new foreign direct investments.
  • It has also taken other initiatives such as bank recapitalization, mergers of 10 public sector banks into four, support for the auto sector, plans for infrastructure spending as well as tax benefits for startups.
  • However,it said that none of these measures directly address the widespread weakness in consumption demand which has been the chief driver of the economy.
  • But the moody expects the economic activity in India to pick up in 2020 and 2021 to 6.6% and 6.7% respectively.

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