Moody’s Investors Service on Friday slashed its estimate of India’s GDP growth rate to almost three-decade low of 2.5 per cent during 2020 calendar year from an earlier estimate of 5.3 per cent on account of the rising economic cost of the coronavirus pandemic.
Moody’s said, at the 2020 estimated growth rate, a sharp fall in incomes in India is likely, further weighing on domestic demand and the pace of recovery in 2021.
“In India, credit flow into the economy already remains severely hampered because of severe liquidity constraints in the banking and non-banking financial sectors,” it said.
If Moody’s projections come out to be correct, China, from where coronavirus spread, will overtake India in 2020, as it is projected to grow at 3.3 per cent in the current calendar year. Also, China’s growth rate will be higher than that of India in 2021.
China’s is projected to grow 6 per cent next year, while India at 5.8 per cent.
Before this, India clocked lower growth rate at 1.1 per cent in 1991-92.