Fitch cuts GDP forecast

New Delhi: Days after India’s economy showed signs of recovery, Fitch Ratings on Monday cut the country’s GDP growth forecast for the current fiscal to 6.7 per cent from the earlier projected 6.9 per cent, saying the rebound was weaker than expected.

Global rating agency Fitch on Monday slashed its GDP forecast for India for FY18 saying “growth has repeatedly disappointed in recent quarters.”

This comes when last month Standard & Poor’s (S&P) had refused to toe Moody’s line in upgrading India’s sovereign rating, citing vulnerabilities stemming from country’s sizeable fiscal deficit, weaker government finances and low per capita income.

“The Indian economy picked up in third quarter of 2017, with GDP growing by 6.3 per cent, 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 Global Economic Outlook,” said Fitch.

It said FY19 forecast has been cut to 7.3 per cent from 7.4 per cent.

“Growth has repeatedly disappointed in recent quarters, although this has partly reflected one-off factors including the demonetisation programme of November 2016 and disruptions related to the implementation of the introduction of the GST in July 2017, said the rating agency.

OUT OF THE THREE global rating agencies, India’s record is mixed. Moody’s has upgraded its sovereign rating for India while S&P has maintained a status quo on India’s sovereign ratings