JOIN USMoody's cuts India growth forecast
Global ratings agency Moody’s on Tuesday cut India’s economic growth forecast to 7 per cent in 2015 from 7.5 per cent earlier.
Moody’s thus became the second ratings agency to pare the country’s GDP forecast after Fitch revised it downwards.
In its Global Macro Outlook report, Moody’s said it slashed the growth outlook in light of a deficient monsoon and the slow pace of India’s industrial recovery.
“We have revised our GDP growth forecast down to around 7 per cent in light of a drier-than-average monsoon, although rainfall was not as low as feared at the start of the season,” said Moody’s Investors Service.
Moody’s also flagged concerns on the pace of reforms in India.
The report comes soon after the government failed to clear the land acquisition and goods and services tax bills in the Monsoon session of Parliament due to logjam.
“One main risk to our forecast is that the pace of reforms slows significantly as consensus behind the need for reforms weakens once the least controversial aspects of the government’s plan have been implemented,” said Moody’s.
It also raised doubts on whether subdued global factors would be able to boost India’s growth levers.
Fitch Ratings in July had lowered India’s GDP growth forecast to 7.8 per cent for the current fiscal from an earlier projection of 8 per cent. It had also cut the projections for the next financial year ending 2017 to 8.1 per cent from an earlier 8.3 per cent.
Fitch, too, had raised concerns over the monsoon and falling exports.
On inflation, too, Moody’s expressed concern saying subdued inflation reflected lower domestic demand. It, however, hoped the Reserve Bank of India’s inflation target for 6 per cent by 2016 would be met.