As prospects of India's economic growth take a major hit due to the coronavirus outbreak, Moody's Investors Service has cut its estimate of the country's economic growth forecast to 2.5 percent during the 2020 calendar year from an earlier estimate of 5.3 percent. However, Moody's has estimated India's growth to bounce back to 5.8 percent in the 2021 calendar year (CY). Globally, it forecasts the gross domestic product (GDP) growth at a negative pace of 0.5% in CY20 eventually growing in CY21.

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A Moody's sign on the 7 World Trade Center tower is photographed in New York .Reuters file

Coronavirus to badly impact India's economic growth

As per a report in Hindustan Times, Moody's highlighted that India's growth for the running calendar year is likely to take a hit due to a sharp fall in incomes and subdued demand. The pace of recovery is also going to be impacted due to Covid-19 outbreak. In its Global Macro Outlook, "The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-day lockdowns. We expect these measures to dampen economic growth in both countries this year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next year."

The outlook further added, "In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors." As per the governments' estimates, India is expected to grow at a pace of 5 percent in 2019-20 as vis-vis 6.1 percent in 2018-19. The revised estimates showed 4.7 percent growth in the third quarter of FY20.

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Migrant labourers sit on a handcart as they wait for work at a wholesale market in the old quarters of Delhi, India, October 10, 2019.Reuters

On Thursday, India announced 1.7 lakh crore of assistance package for poor under its  Gareeb Kalyan package which is aimed at additional food transfers without any cost, cash transfers for vulnerable segments, concessions on government schemes. Besides, the finance minister also allowed the EPFO members to withdraw an amount up to 75 percent of their funds or three months' wages, whichever is lower. Today, the Reserve Bank of India also announced relief on the EMI payments.