Shock to India: Moody's lowers rating to negative

India's policies are ineffective in removing economic weakness: GDP will remain low in future: Moody's

(PTI) New Delhi, Ta. November 8, 2019, Friday

India's shock Moods Investors Service has lowered India's rating from negative to negative. Moody's has said that because the government has been ineffective in raising the growth rate, the growth rate will remain low in the near future.

The agency has endorsed the BAATU foreign currency and traditional currency rating for India. The rating agency said in a statement that Moody's decision to negate the scenario shows the risk of economic growth being too low compared to the previous one.

Moody's estimates the fiscal deficit in fiscal year 2019-20 will be 3.7 percent of GDP. This estimate is much higher than the government's fiscal deficit target. The Government of India has set a target of fiscal deficit of 3.3% of GDP in the financial year 2019-20.

Moody's has further stated that the policies of the present government have been ineffective in eliminating economic weakness. Due to which the debt burden is increasing. It is worth mentioning that in the first quarter of April to June, India's GDP stood at 5%. Which is the lowest since 2013. Demand and government spending in India are declining amid the global recession.

However, the Indian government has criticized Moody's decision to lower the rating. The government has stated that the foundation of the Indian economy is strong and the recent economic reforms by the government will increase investment and India will become the fastest growing economy in the world. Earlier in its annual report, the IMF estimated India's GDP to be 6.1 per cent in FY 2019-20.