Stimulus measures to support sentiment but headwinds to drag growth to 6.4 pc: Moody's

The raft of measures announced by the government to boost the sagging economic growth will provide some support to investor and business sentiments, but domestic and external headwinds will continue to persist through the year, resulting in a 6.4 per cent GDP growth, Moody's Investors Service said on Monday.

Commenting on the measures announced by Finance Minister Nirmala Sitharaman last week, William Foster, Vice President, Sovereign Risk Group, Moody's Investors Service said GDP growth rate will pick up next fiscal year to 6.8 per cent.

The measures announced, including an offer of tax incentives and some reforms across a variety of sectors, were an effort to stimulate slowing economic growth, he said.

"We expect the measures to provide some support to investor and business sentiment, and the acceleration of the capitalization of public sector banks to help improve the provision of credit and transmission of monetary policy easing," he said.

"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."