Moody’s Investor Services has downgraded India’s GDP projection for current financial year 2020-21 to be 0 per cent, lower than 4.8 per cent estimated in 2019-20 as ambiguity due to the virus continues. It was earlier estimated 2.6 percent growth in FY21.
Moody’s have warned that the negative outlook on India’s credit rating implies to the economic growth and will remain “significantly lower” than in the past.
In November 2019, the rating agency had affirmed India’s investment grade rating rating (Baa2), but brought down the outlook to negative from stable amid economic slowdown.
Further, the rating agency expects the output to contract sharply in the second quarter due to the lockdown, resulting in very frail economic activity for the year.
Due to the prolonged restrictions on movement and business activity, consumption that contributes to around 60 percent of India’s economic output and it will slow sharply, it said.
On 1 May, the centre extended its national lockdown for a second time, until 17 May, and presented a roadmap for the gradual relaxation of restrictions. The lockdown began on 24 March for a 21-day period and was consequently extended to 40 days.
“Even when restrictions are lifted, we do not expect an immediate pickup in consumption, as the resumption of activity is likely to be gradual,” it said.