In the latest report published on Monday, Deborah Tan, an Assistant Vice President at Moody’s Investors Service, made downward revision to India’s economic growth forecast for the fiscal year 2019/2020 amid weak household consumption.
Key Quotes:
“India’s economy is likely to grow 4.9% in the currency financial year, against earlier prediction of 5.8%.”
“What was once an investment-led slowdown has now broadened into weakening consumption, driven by financial stress among rural households on the back of stagnating agricultural wage growth and constrained productivity, as well as weak job creation due to rigid land and labor laws.”
“While the income shock to households has been unfolding over several years, it was not visible on headline growth as long as households could borrow from NBFIs. With the materialization of a credit supply shock, we now see the impact of these twin shocks on growth.”
“Although a modest recovery is expected for next year, supported partly by spillovers from policy stimulus, economic growth will be weaker than in recent years, which will have negative credit implications for Indian issuers in a range of sectors.”
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