New Delhi: Following a prolonged period of the weakened growth of India’s economy, Moody’s Investors Service on Thursday came up with its forecast for the fiscal year 2019-20 and slashed the GDP growth rate to 5.8 percent from an earlier pitched rate of 6.2 percent, the lowest projection till date for FY20.

Highlighting the bleak GDP rate forecast, the globally reputed growth projector also stated that if the current state of economy continues, it may dampen the prospects for fiscal consolidation of the government.

“A prolonged period of slower nominal GDP growth not only constrains scope for fiscal consolidation but also keeps the government debt burden higher for longer compared,” Moody’s growth forecast stated.

It must be noted here that India’s GDP growth rate fell to a nearly seven-year low of 5 percent in the first quarter (April-June) of this year’s fiscal year. As a result, the demand for consumer products was horribly affected, especially in the country’s domestic manufacturing sector.

Taking accountability for the same, the central bank was forced to cut its 2019-20 growth forecast to 6.1 percent last week from the earlier 6.9 percent. Further, the  Finance Ministry decided to cut the corporate tax rate, which will cost the Centre nearly Rs 1.5 trillion in the form of tax revenues.

In view of the economic slowdown and the subsequent measures to curb the same, Moody’s forecast expects the government to run a fiscal deficit equivalent to 3.7% of gross domestic product this fiscal year.

Moreover, the global ratings agency said that Asia’s third-largest economy would grow 6.6 percent in the next fiscal, i.e., FY21, starting April 2020.