Moody's Investors Service sees India's economic growth at zero' in FY21
Mumbai: Moody's Investors Service on Friday said it estimates India's GDP growth to hit zero' in FY21 and pointed to a wide fiscal deficit, high government debt, weak social and physical infrastructure, and a fragile financial sector.
The quality of India's economic growth has declined in recent years, demonstrated by financial stress among rural households, relatively low productivity and weak job creation, the agency said.
In its forecast for FY21, the agency estimated India's gross domestic product (GDP) growth at zero, meaning the country's economic growth will remain flat this financial year, and the same is seen accelerating to 6.6 per cent in FY22.
In its credit opinion which comes following the change in the forecast, Moody's warned that the COVID-19 "shock will exacerbate an already material slowdown in economic growth, which has significantly reduced prospects for durable fiscal consolidation".
Analysts across the board have been certain about the heavy economic toll that the pandemic will take on the country.
Moody's local arm Icra has pegged for a contraction of up to 2 per cent in the growth as a result of the crisis, which has seen the country being put under a lockdown for nearly two months to arrest the spread of infections.
Late last month, Moody's had slashed its calendar year 2020 GDP growth forecast to 0.2 per cent.
Its negative outlook on the sovereign rating, which was revised last in November 2019 from stable', reflects increasing risks that economic growth will remain significantly lower than in the past, it said, adding that this takes into account the deep shock triggered by the virus outbreak.
Meanwhile, India's credit strengths include a large and diverse economy, favourable demographic potential and a stable domestic financing base to fund the government debt, it noted.
In March, the government had announced a relief package worth Rs 1.7 lakh crore, and there are speculations of another follow-up package in the offing.
These measures will reduce the depth and duration of India's growth slowdown, but there is a probability of an "entrenched weakening" on prolonged financial stress among rural households, weak job creation and a credit crunch among non-bank financial institutions, it said.
Reform prospects, which can take care of some of the concerns with the Indian economy, have "diminished", the agency said.
It further warned that a downgrade in the rating could happen if the fiscal metrics weakened materially, and made it clear that a "negative" outlook indicates that an upgrade in the rating is unlikely in the near term.
However, the outlook can be changed to "stable" if the fiscal metrics stabilise, it added.
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Don't be swayed by diversionary tactics, come out and vote to protect democracy: Kharge to voters
New Delhi (PTI): As polling for the second phase of Lok Sabha elections began, Congress president Mallikarjun Kharge on Friday urged voters to come out and vote to protect democracy from the clutches of dictatorship.
In a fervent appeal to voters, he said this is not an ordinary election and they should not be swayed by any diversionary tactics.
He said the Constitution should reverberate in their hearts before they push to voting button.
Kharge also appealed to first time voters to come out in large numbers and vote as they were the real changemakers in this movement for democracy.
"'We, the people of India' - this soul of the Constitution of India, should reverberate in your hearts and minds, before you push the voting button.Do not forget that this is not an ordinary election. It is an election to protect Democracy from the clutches of dictatorship," he said in his message on X.
"To all my dear citizens, from 89 Constituencies in 13 States and UTs, do not get swayed by any diversionary tactics and lies.
"Always make your vote count. For it may change the lives of 140 crore Indians by bringing the paradigm of Yuva Nyay, Nariman Nyay, Kishan Nyay, Shramik Nyay and Hissedari Nyay," Kharge said.
Imagine a future where justice, freedom, equality and liberty is guaranteed, the Congress chief said, adding future where rapid inclusive growth and transformative policies are guaranteed.
"My dear first time voters, cut the clutter and distance the din, for you are the real changemakers and I welcome each one of you in this movement for Democracy," he added.
