International rating agency Moody's Investors Service in its latest report has cut India's gross domestic product (GDP) growth forecast to 5.8 per cent for the current fiscal year (FY20) from 6.8 per cent in FY19, but it expects GDP to pick up to 6.6 per cent in FY21 and around 7 per cent over the medium term.
The rating agency pointed that the drivers of the deceleration are multiple, mainly domestic factors and in part, long-lasting. It attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation.
Moody’s further said that 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. As per rating agency, given India's already weak fiscal position, this will weigh on the sovereign credit profile.