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Modi Government worried about the ratings of the rating agencies

Friday - November 8, 2019 2:37 pm , Category : WTN SPECIAL
The economic slowdown seems a big challenge for Prime Minister Modi
The economic slowdown seems a big challenge for Prime Minister Modi

Questions raised on the Modi Government's economic policies due to continuous reduction in GDP growth estimate

NOV 08 (WTN) - The economies of many countries of the world have been affected due to the global economic slowdown. According to a report by the International Monetary Fund, the economic slowdown has had more or less impact on 90 percent of the world's economies. Talking about the impact of the economic slowdown on the Indian economy; for your information, let us know that the continuing decline in the first quarter growth rate of the current financial year is a sign that the Indian economy is in the grip of recession. 

The Reserve Bank of India, including several global and Indian financial institutions, has lowered the GDP growth estimates for the current financial year. Economists have a view that due to economic slowdown, reduction in GST collection, and deduction in corporate tax, the fiscal deficit of the Government of India may be higher than anticipated in the current financial year. That is it is clear that the Indian economy has suffered a major setback due to the economic slowdown and the side effects that are visible will continue for some more time.  

Amidst all this, there is negative news for the Indian economy. Actually, the negative news is that rating agency Moody’s Investors Service has reduced India's rating. Moody’s has reduced its outlook on the Indian economy from 'stable' to 'negative'. Commenting on the Indian economy, Moody’s  says, “The Indian economy has increased risk compared to before, so it has reduced ratings.” 

For your information, let us know that the rating agency Moody’s attitude about the economy of any country is very important. Moody’s outlook gives an idea of ​​how effective the government of the concerned country and the policies of that country are in combating economic weakness. That is the negative outlook released by Moody’s attitude to the Indian economy shows that the Modi Government's policies in Moody’s approach have so far failed to cope with the economic slowdown and investing in India is currently a risk. 

Earlier, Moody’s in a report in October slashed India's GDP growth estimate for the current financial year 2019-20 to 5.8 percent. For your information, let us know that earlier Moody’s had released an estimate of 6.2 percent GDP growth for the current financial year. Not only Moody’s but earlier, several rating agencies have lowered the GDP growth estimate for the current financial year. It may be noted that India's GDP growth rate in the April-June quarter for the current financial year has been just 5 percent, which is the lowest since 2013.

In fact, the economic slowdown has had a profound impact on the economy of fast-growing countries like India. Due to the economic slowdown, the market demand has decreased, due to which the production and sales have been greatly affected. India's automobile sector is the best example to review factors such as the reduction in demand, the decline in sales, and affected production due to the economic slowdown, which has been affected by the recession for the last 15 months. 

The economic slowdown has such an impact on the Indian economy that the pace of the economy is not increasing due to weak demand and decreasing government expenditure. Before the impact of the economic slowdown, the Indian economy was among the fastest-growing economies in the world and had a GDP growth rate of around 8 percent.

Apart from Moody’s, other rating agencies have already lowered India's GDP growth estimate. Rating agency Fitch had last month lowered its GDP growth estimate for the current fiscal year 2019-20 to 5.5 percent from 6.6 percent. At the same time, in September, the rating agency CRISIL had claimed that the economic recession in India is more widespread and deeper than that. Then CRISIL also lowered the GDP growth estimate. According to CRISIL, India's GDP growth could be 6.3 percent in the current financial year 2019-20.

That is it is clear that the economic slowdown has slowed the growth rate of the Indian economy. While Prime Minister Narendra Modi is formulating and implementing policies to achieve the target of $ 5 trillion economy by 2025, but the economic slowdown is proving to be the biggest obstacle in the success of the Modi Government's policies. It is not that the Indian economy has suffered only due to the economic slowdown; the economic recession has also shocked the world's second-largest economy like China. 

As we told you that Moody’s has reduced its rating for the Indian economy from 'stable' to 'negative' in its outlook. So this outlook of Moody’s is bound to affect the Indian economy. This is why because foreign companies invest in India only on the basis of Moody’s and other such rating agencies, while on the basis of ratings, it is easy to get a loan from global financial institutions. Making negative comments about the Indian economy will have a profound impact on foreign investment in India and will make it difficult to generate employment, including foreign exchange. 

Now it has to be seen that what policies of the Modi Government are able to support the Indian economy struggling with the economic recession? By the way, it is being said that the US-China trade war may end by the end of this year, in such a situation, after the initial months of next year, the economic recession can provide relief to the whole world. Now after getting relief from the economic slowdown, it has to be seen how successful the Modi Government to be proved to accelerate the Indian economy?