Categories: Business

Indian economy to contract in FY21 says moodys

Photo: FILE

Moodys

new Delhi. Rating agency Moody's Investors Service estimates that the Indian economy may see a decline in 2020-21. This will be the first time in four decades that the ongoing 'lockdown' (shutdown) to prevent the corona virus pandemic will lead to a decline in the domestic economy facing challenges from reduced consumption and stagnating business activities. According to Moody's, even before the Corona virus crisis, the growth rate of India's economy had slowed down and reached the lowest rate of six years. The steps taken by the government in the economic stimulus package are not in line with expectations, the problems of the economy are much broader than this.

Moody's said in its report, "We now anticipate that there will be a real decline in the gross domestic product (GDP) growth rate of the Indian economy in FY 2020-21. Earlier we had predicted the growth rate to be zero. "However, Moody's expected the economy to improve in 2021-22. It may also be stronger than its predecessor estimated at a growth rate of 6.6 percent. The report states that the Kovid-19 lockdown is likely to have a profound impact on the Indian economy. This will affect both the public and private sector.

It is noteworthy that the lockdown was announced on 25 March in the country. Since then its duration has been extended four times with concessions. The fourth lockdown will remain in force until 31 May. The 'lockdown' has led to a crisis especially in the unorganized sector of the country. The sector contributes more than half of GDP. Regarding the economic stimulus package, Moody's said, "The government's direct fiscal stimulus can be in the range of one to two percent of GDP. Most of Sircar's plans are related to loan guarantees or to address the cash concerns of the affected areas. "Directly the amount of financial spending is far below our expectations and it is less likely to drive growth."

This post was published on May 22, 2020 10:27 pm

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