Fitch disappointed by India’s GDP growth rate; cuts growth forecast for FY18 and FY19

Fitch disappointed by India’s GDP growth rate; cuts growth forecast for FY18 and FY19

India News

Rating agency Fitch on Monday has cut India’s GDP growth forecast for the current fiscal to 6.7% from 6.9% and fiscal year 2018-2019 to 7.3% from 7.4%, saying the that the economic growth has “repeatedly disappointed in recent quarters”.
Fitch has cut India’s GDP growth forecast by 20 basis points to 6.7% for FY18 and 10 basis points to 7.3%, the economic growth in the second quarter showed signs of recovery at 6.3% from a three-year low of 5.7% in the first quarter of the current fiscal year after the implementation of the ambitious direct tax regime of the GST. According to the rating agency, the 6.3% growth rate was “weaker than expected.”
Fitch growth forecast cut follows Moody’s surprise rating upgrade of India and S&P’s hold on the same. Fitch Ratings, which also currently rates India at “BBB-minus” with a “stable” outlook, in line with S&P’s ratings.
India’s GDP growth in the second quarter (Jul-Sep) accelerated to 6.3% from 5.7% in Apr-Jun and 6.1% in Jan-Mar, Central Statistics Office data showed. However, the pace of growth in Jul-Sep was still way below 7.3% recorded in the corresponding quarter a year ago.
Fitch, however, expects GDP growth to pick up in the next two years on back of gradual implementation of the structural reform agenda and higher real disposable income, PTI reported. “The Indian economy picked up in 3Q17 (July-September), with GDP growing by 6.3 per cent year-on-year, up from 5.7 per cent in 2Q17. However, the rebound was weaker than we expected, and we have reduced our growth forecast for the fiscal year to end-
March 2018 (FY18) to 6.7 per cent from 6.9 per cent in the September GEO,” Fitch said in its latest GEO.