Credit rating agency Fitch Ratings has lowered India’s economic growth forecast for the next financial year starting April 1, to 6.8 per cent from its previous estimate of 7 per cent, on weaker than expected momentum in the economy.
“While we have cut our growth forecasts for the next fiscal year (FY20, ending in March 2020) on weaker-than-expected momentum, we still see Indian GDP growth to hold up reasonably well, at 6.8 per cent, followed by 7.1 per cent in FY21,” Fitch said in its Global Economic Outlook.
Fitch Ratings cut India’s FY19 GDP growth forecast to 7.2 per cent from 7.8 per cent on December 6. The rating agency has also cut growth forecasts for FY20 and FY21 to 7 per cent from 7.3 per cent and 7.1 per cent from 7.3 per cent, respectively.
According to Fitch, the RBI has adopted a more dovish monetary policy stance and cut interest rates by 0.25 percentage at its February 2019 meeting, a move supported by steadily decelerating headline inflation.
“We have changed our rate outlook and we now expect another 25 bps cut in 2019, amid protracted below target inflation and easier global monetary conditions than previously envisaged,” it said.
“On the fiscal side, the budget for FY20 plans to increase cash transfers for farmers,” it added. Fitch said, it’s benign oil price outlook and expectations of accelerating food prices in the coming months should support rural households’ income and consumption.
However, according to the World Economic Situation and Prospects (WESP) report released by the UN last month, the Indian economy is expected to accelerate in 2019-20 to expand by 7.6 per cent from 7.4 per cent in the year ending 31 March on the back of robust growth in private consumption, while private investment may continue to remain sluggish.
The International Monetary Fund (IMF) has projected India’s growth at 7.5 per cent in 2019-20 amid slower global expansion.
Rating agency CRISIL in its India outlook has predicted India’s GDP growth to be marginally better in 2019-20 at 7.3 per cent from 7.2 per cent in 2018-19 as estimated by the Central Statistics Office.