Because of Increased risks that growth of Indian economy will remain lower than in the past, Moody’s Investors Service has cut India’s ratings outlook to “negative” from “stable”

Moody’s said that its action partly reflected government and policy ineffectiveness in addressing economic weakness, which in turn led to an increase in debt burden from already high levels.

Moody’s added, “While government measures to support the economy should help to reduce the depth and duration of India’s growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown.”

Moody’s now expects a government deficit of 3.7% of GDP in the fiscal year ending in March 2020, compared with a government target of 3.3% of GDP.

Credit Rating agency, Moody’s, further anticipated that it does not expect the credit crunch among non-bank financial institutions to be resolved quickly. The domestic auto sector is also in the middle of one of its worst slowdowns ever, and overall jobless rates rose to 8.5% in October, the highest since August 2016.

Moody’s further raised apprehensions about Indian economy and said that Growth in fuel demand is on course to fall to its lowest in at least six years as the economy slows and after heavy rains impacted gasoil consumption, which accounts for about two-fifth of the nation’s overall fuel use.