Credit rating agency Moody’s has announced the downgrading of India’s growth forecast for 2020 to 5.4% from 6.6% it had projected earlier. The growth projection for 2021 has also been reduced to 5.8% from earlier announced 6.7%. The earlier projections were announced in November’19.
In today’s update, the rating agency has stated that the downward revision of the growth rates is more due to internal factors than external variables. It further stated that revival of the economy would be dependant on reversal of demand slump and bank credit growth and the agency considered the union budget 2020 as lacking enough stimulus to drive domestic demand.
Complicating the current economic scenario is the coronavirus outbreak in India. India is moderately vulnerable to the outbreak. A wide range of Indian manufacturing units are dependant on supplies from Chinese factories that remain inactive. This is likely to put supply chain management of Indian manufacturers in a spot of bother.