Moody's reduced India's GDP estimates from 5.8 percent to 5.6 percent for 2019

(PTI) New Delhi, Ta. November 14, 2019, Thursday

Moody's Investor Service has projected India's economic growth for 2019 to be 5.6 percent. Moody's says consumption demand is not rising despite government efforts.

Moody's has said that we have revised India's economic growth projections. According to our new estimates, India's GDP will be 5.6% in 2019.

It may be recalled that Moody's had projected India's economic growth for the financial year, October 10, to 5.8 per cent from 6.2 per cent earlier.

Just last week, Moody's reduced India's outlook from negative to negative. Moody's has stated in its Global Macro Outlook 2020-21 that economic activities in India will increase in 2020 and 2021. According to Moody's, India's GDP is projected to be 6.6t in 2020 and 6.7% in 2021.

India's economic growth has slowed down since mid-2018. Real GDP has dropped to five percent in the second quarter of 2019 and unemployment is steadily rising. According to Moody's, investment was already low but the economy was booming due to consumption demand. However, economic growth has been declining as consumption demand is also declining.

The Moody's report states that the Modi government is taking several steps to increase GDP. In September, the government reduced the corporate tax from 30 percent to 22 percent. In order to attract new FDI, the tax for new manufacturing companies has been reduced to 15%.

In addition, the government has also announced the merger of ten government banks and the creation of four. However, to date, not all of these steps have had a significant effect on the economy. Moody's further said that the RBI is effectively lowering interest rates this year and is still likely to reduce interest rates.