Last week, Moody’s, the American credit rating agency, lowered its outlook for India to negative. With their GDP dropping to 5 percent, a six-year low, Moody’s forecast a worsening economic climate and a lack of government action to reverse the trend.
Key factors for the negative outlook were the worsening liquidity squeeze, which was exacerbated by India’s enormous shadow banking system and bad loans to public and private banks and, according to its analysis, “lower government and policy effectiveness at addressing longstanding economic and institutional weakness than Moody’s had previously estimated.”
Overall, India has seen a bullish stock market since the government said it would cut corporate taxes from 35 to 25 percent.
Playing the fiscal stimulus card, the government committed $1.4 billion to invest in its real estate sector.
PUBLISHER’S NOTE: As we have long noted in the Trends Journal and Trends in The News podcasts, India’s worsening economic climate has nothing to do with trade wars, which is the general excuse given by the mainstream business media for the global slowdown. But this fact is totally ignored by them.