Despite the slowdown across all major economies, it is shocking to see the Indian economy faltering at such a faster pace. According to the latest forecast by India's National Statistical Office, the economy is estimated to have grown only 5 percent over 2019-20, slower than the previous year's 6.8 percent and its worst performance in 11 years.

More worryingly, a 5 percent growth rate may be just the beginning of a slowdown cycle that can hardly be reversed. Without some "big-bang" measures from the Modi government, the country's economy might see further accelerated decline this year. In just a few months, expectations for India's economy have soured amid the headwinds. Its GDP hit a six-year low of 4.5 percent in the July-September quarter of 2019, while consumer confidence dropped to its lowest level since 2014.

External factors may have contributed to India's economic slowdown, with global capital withdrawal exacerbating the country's economic woes. But domestic problems like the credit crisis are the major causes behind India's recent slide. In September 2018, the collapse of AAA-rated shadow bank Infrastructure Leasing and Financial Services sent jitters through the financial market, and was dubbed India's "Lehman moment." Then in November 2019, another major shadow bank Dewan Housing Finance Corporation Ltd began bankruptcy proceedings. Over the past decade, shadow banks have played a critical role in India's economy, so the continuing credit crisis has hit consumer and investment demand hard, inflicting heavy damage on a wide range of sectors like auto and housing.

India's development model faces bottlenecks that it needs to break through in order to return to a high-growth path. While India hopes to boost its manufacturing sector to become a new engine for its economy, the "Make in India" initiative already seems to have fallen flat. The country's factory activity growth continued to perform poorly last year, with the Index of Industrial Production contracting by 4.3 percent in September, dropping to its lowest level in eight years. Seemingly, India failed to attract manufacturing companies seeking relocation during the US-China trade war due to its inability to develop mass manufacturing.

Additionally, the South Asian country's debt burden has been on the rise in recent years, and is expected to hit $2.01 trillion in 2019, according to Statista. Nevertheless, its forex reserves were at around $450 billion at the end of 2019, according to its central bank. To a certain extent, the debt pressure has squeezed the room for fiscal maneuver.

In fact, New Delhi seems to have used almost all of its tools last year in the face of economic difficulties, with five interest rate cuts and $1.5 trillion spending package on infrastructure, only to see minimal effects thus far. It is, of course, understandable that problems behind the sharp slowdown are unlikely to be addressed in the short term. But it is also undeniable that the Indian economy is becoming increasingly vulnerable to uncertainties and risks at home and abroad amid the economic downturn. It is disturbing to think that a bigger crisis may be brewing for the country's economy, and that such a crisis would likely become a black swan event for Asian economies in 2020.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn