A Varied Outlook & Mass Downgrade Of GDP

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A Varied Outlook & Mass Downgrade Of GDP
Rajat Mishra - 16 October 2019

New Delhi, October 16: Gross Domestic Product (GDP) is a parameter that depicts how the economy is performing. The Indian GDP growth has steeply fallen to 5 per cent, the lowest in the last 6 years.

But in the recent past, many international organisations and credit rating agencies downgraded India’s GDP growth projection. Going through all projected GDP numbers, we can surely term this phenomenon as mass downgrading. Let’s quickly go through all the projected numbers in last few days.

September 19: Paris based inter-governmental economic forum, Organisation of Economic Cooperation and Development (OECD) cut India’s GDP forecast to 5.9 per cent for 2019-2020. This happens to be the lowest projection so far.

September 25: Manila-based Asian Development Bank (ADB) slashed India’s growth projection to 6.5 per cent from 7 per cent in July. It also projected an increase in India’s growth rate for 2020-21 at 7.2 per cent, attributing it to the “proactive policy interventions along with a recovery in domestic demand and investments.”

October 1: Another rating agency, Standard and Poor’s, slashed India’s ratings and stated that the country’s slowdown was “deeper and more broad-based” than what it expected. It also added that there were more signs of caution. It projected India’s GDP at 6.3 per cent, a reduction by 0.8 percentage points from its previous prediction for 2019-20.

October 4: The Reserve Bank of India (RBI), the country’s apex bank, slashed India’s growth rate projection to 6.1 per cent for 2019-20. The RBI projected GDP growth rate at 7.4 per cent in February. The figure gradually decreased in June and August, before coming down to 6.1 per cent when the RBI made its latest revision.

October 10: Credit rating agency Moody’s Investor Service had also cut India’s growth rate to 5.8 per cent from 6.2 per cent for 2019-20. It forecast that the rate would pick up to 6.6 per cent in 2020-21.

October 13: Washington-based World Bank cut India’s GDP growth for 2019-20 to 6 per cent in its latest South Asia Economic Focus report. It also projected 6.9 per cent as the growth rate for 2020-21, and 7.2 per cent for 2021-22. In April, the World Bank had forecast a growth rate of 7.5 per cent for India.

October 15: The International Monetary Fund (IMF) on Tuesday slashed Indian GDP projection by 90 basis points (bps) to 6.1 per cent, which is down by 1.2 per cent of IMF’s April projection that was 7.2 per cent.

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