Unfortunately, India’s economic outlook is negative

Jakarta – Moody’s downgraded India’s Sovereign Credit Rating (SCR) to negative on Thursday (November 7th, 2019). Before that, India’s ranking was at a stable level. This means that India’s economic growth prospects are currently declining.

Moody’s told CNBC on Friday (8/11/2019) that the changes reflect the ineffectiveness of the Indian government and its policies in addressing economic and institutional weaknesses. The slowdown is leading to an increase in India’s debt burden, which continues to grow.

India is currently experiencing a significant economic slowdown. Economic growth reached its lowest level in six years in the second quarter of this year.

The ongoing crisis in the financial sector has paralyzed the credit sector, which is affecting investment. Meanwhile, the Indian government’s recent policies have shaken small and medium-sized businesses.

“While government action in support of the economy should help reduce the extent and duration of the slowdown in growth in India, ongoing financial stress in rural areas, poor job creation and, more recently, the credit crunch in non-bank financial institutions (NBFIs) to reduce. , has increased the likelihood of a slowdown, “Moody’s analysts said in a CNBC report on Friday (08/11/2019).

Government data shows India’s net tax collection in Q2 and Q3 this year was the lowest in five years, according to a Business Today report. This net tax collection is well below the budget target of the Indian government.

Lower tax revenues could boost the Indian government’s budget deficit target of 3.3% of GDP as this fund aims to spend some fiscal measures to stimulate the economy.

Unless the Indian government changes its economic policies, the obstacles it currently faces will be even more serious.

“As long as nothing changes, structural constraints on productivity and job creation will continue to weigh on India’s sovereign credit rating (SCR),” Moody’s wrote.

In 2017, the rating agency Moody’s upgraded the Indian government’s rating from Baa3 (positive outlook) to Baa2 (stable outlook). However, in a report this Thursday, Moody’s said the outlook for India has deteriorated since the 2017 rating upgrade for India.

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