The global ratings agency cited higher financing cost and reduced credit availability as reasons behind downgrading the projection.
In its latest forecast, Fitch Ratings, a global ratings agency, has lowered India’s GDP growth forecast to 7.2 per cent for fiscal 2018-19. In its previous forecast in June, the agency had projected India’s growth rate at 7.4 per cent for the current fiscal and 7.5 per cent for the next fiscal.
It cited higher financing cost and reduced credit availability as reasons behind downgrading the projection.
“We have lowered our growth forecasts on weaker-than-expected momentum in data (GDP), higher financing costs and reduced credit availability. We now see GDP growth at 7.2 per cent in the fiscal year ending March 2019 (FY19), followed by 7.0 per cent in FY20 and 7.1 per cent in FY21,”’ said the agency in its Global Economic Outlook.
As per Fitch, GDP growth had softened quite substantially in July-September quarter of the current fiscal, with a growth of 7.1 per cent against 8.2 per cent in April-June.
It said India’s fiscal policy should continue to support growth in the run-up to elections in early 2019. It has forecast Indian rupee to weaken to 75 to a dollar by end of 2019.
“Stepped-up public investment has helped to stem the downward trend in the investment/GDP ratio, boosted by infrastructure spending. There have also been measures to support rural demand,” it added.
Even State Bank of India (SBI), in its recently released research report, has estimated the country’s GDP growth to slip below 7 per cent level in the second half of the current fiscal.
Source: Businessline, media reports