Moody's cautious over Indian government measures to boost economy

Global financial consulting major Moody's said on Tuesday that recent measures announced by the Indian government to stimulate economy will provide some support to investor confidence, resulting in 6.4 per cent real GDP growth in the current fiscal year.

"We expect the measures to provide some support to investor and business sentiment, and the acceleration of capitalisation of public sector banks to help improve the provision of credit and transmission of monetary policy easing," said William Foster, Vice President of Sovereign Risk Group at Moody's Investors Service.

"However, we also expect domestic and external headwinds to persist over the course of the year, resulting in 6.4 per cent real GDP growth in the fiscal year ending in March 2020, before growth picks up to 6.8 per cent next year," he said in a statement.

Moody's forecast for India's calendar year growth remains at 6.2 per cent as outlined in its last week's report on 16 major Asian economies.

On Friday, Finance Minister Nirmala Sitharaman had announced a slew of measures including the rollback of controversial tax surcharge on foreign portfolio investors (FPIs) and equities of domestic investors announced in the Budget last month besides some relief measures for the beleaguered automobile sector.

Moody's has cut India's GDP growth forecast for the calendar year 2019 to 6.2 per cent from its previous estimate of 6.8 per cent. For 2020 calendar year, it reduced the estimate to 6.7 per cent. It said the weaker global economy has stunted Asian exports and the uncertain operating environment has weighed on investment.