The World Bank slashed India’s growth forecast for the current fiscal year to 6%, down from 7.5%. The body warned of “severe” slowdown in the country’s financial sector.
In its last forecast in April, the bank had said that India’s economic outlook was strong and expected growth of 7.5% during the current fiscal year that began in April.
However, a massive slowdown struck taking it to its worst growth figures in the last six years. During the April-June quarter the country grew by just 5%. India’s industrial output also shrank at its fastest rate.
In efforts to kick-start the economy, India’s central bank has cut interest rates five times this year, and underlined the challenge for policymakers by downgrading its growth forecast to 6.1% from 6.9% earlier this month.
Last week, Moody’s Investors Service lowered its growth forecast for India to 5.8% for the current fiscal year from 6.2%, adding that a long period of weak growth will hamper the government’s fiscal consolidation plans.
The World Bank expects the slowdown to continue until April next year.