Credit rating agency Fitch Ratings has lowered India’s economic growth forecast for the next financial year starting April 1, to 6.8% from its previous estimate of 7%, 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%, followed by 7.1% in FY21,” Fitch said in its Global Economic Outlook.
Fitch Ratings cut India’s FY19 GDP growth forecast to 7.2% from 7.8% on December 6.
The rating agency has also cut growth forecasts for FY20 and FY21 to 7% from 7.3% and 7.1% from 7.3%, 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.