Moody’s investor service on Friday reduced its estimate of India’s GDP growth rate to a nearly three-year low of 2.5% in calendar year 2020 from 5.3% in because of the increased economic cost of the coronavirus pandemic.
Moody’s said that at the estimated growth rate in 2020, a sharp drop in revenues in India is likely, which will further weigh on domestic demand and the pace of recovery in 2021.
“In India, the flow of credit into the economy is already severely hampered due to severe liquidity constraints in the banking and non-bank financial sectors,” he said.
If Moody’s projections prove to be correct, China, from where the coronavirus has spread, will overtake India in 2020, as it is expected to grow 3.3% in the current calendar year. In addition, China’s growth rate will be higher than that of India in 2021.
China is expected to grow 6% next year, while India will reach 5.8%.
Previously, India had recorded a growth rate of less than 1.1% in 1991-92.