Moody's Investors Service on Thursday cut India's economic growth forecast for current year to 5.6 per cent from 5.8 per cent estimated earlier, saying the GDP slowdown is lasting longer than previously expected.
"We have revised down our growth forecast for India. We now forecast slower real GDP growth of 5.6 per cent in 2019, from 7.4 per cent in 2018," it said.
It expected economic activity to pick up in 2020 and 2021 to 6.6 per cent and 6.7 per cent, respectively, but the pace to remain lower than in the recent past.
"India’s economic growth has decelerated since mid-2018, with real GDP growth slipping from nearly 8 per cent to 5 per cent in the second quarter of 2019 and joblessness rising," the credit rating agency said.
"Investment activity was muted well before that, but the economy was buoyed by strong consumption demand. What is troubling about the current slowdown is that consumption demand has cooled notably," it added.
Earlier this month, Moody's had downgraded India's outlook from 'stable' to 'negative', saying there was increasing risks that economic growth will remain materially lower than the past.
The Finance Ministry had reacted to the developmet saying the fundamentals of the economy remained quite robust and series of reforms undertaken recently would stimulate investments.
"India's relative standing remains unaffected," the Finance Ministry said citing International Monetary Fund's (IMF) recent World Economic Outlook putting Indian economic growth at 6.1 per cent in 2019 and rising to 7 per cent in the year after.