Earlier this week, Moody's Investors Service had also predicted the country's real GDP growth to decline to 5.8% this fiscal year.
The World Bank on Sunday, ahead of its meeting with the International Monetary Fund (IMF), cut its growth forecast for India's economy in the current fiscal year to 6% from the earlier 7.5% thereby hinting at the current economic slowdown. The Bank, however, maintained that India is still a 'fast-growing economy' and that its growth numbers are still higher than that of most countries in the world, according to agency reports.
The World Bank had back in April stated that the growth forecast for India was 7.5% at the beginning of the current fiscal year. But this time the Bank has taken note of the economic slowdown that has jammed India's economy down to its slowest growth pace in the past six years. In such a scenario, the Bank's forecast indeed comes across as alarming and acknowledges the economy's turtling expanding by just 5% in the April-June quarter, hit by flagging consumer demand and a slackening in government spending.
The RBI's monetary policy committee on October 4, 2019, i.e. Friday announced the fifth consecutive rate cut this year to support government measures for boosting economic activity amid benign inflation. Admitting that India was facing a big economic slowdown, the RBI also revised the gross domestic product (GDP) growth for 2019-20 downwards from 6.9% in the August policy to 6.1%.
Earlier this week, Moody's Investors Service also predicted the country's real GDP growth to decline to 5.8% this fiscal year. India is experiencing a pronounced slowdown in economic growth which Moody's has assessed to be partly related to long-lasting factors.
"Prolonged softer growth will dampen prospects for the government's fiscal consolidation plans and hamper its ability to prevent a rise in the debt burden," it had said in a report released last Thursday. "Given India's already weak fiscal position, this will weigh on the sovereign credit profile."
However, in what comes as a potential silver lining, the World Bank in its latest report also acknowledged that India being a fast-growing economy, the country can still look to recover the falling growth rate to 6.9% by 2021 and as much as 7.2% by 2022 given healthy policies benefit the economy.
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