Growth forecast reduced by 1.3 percent.
Fitch Ratings has reduced India’s economic growth forecast for the current financial year to 8.7 percent. However, it has increased the GDP growth forecast for the next financial year to 10 percent. The rating agency has said that instead of derailing the economic revival, the second wave of the Kovid-19 epidemic simply delayed it.
Fitch Ratings, in its ‘APAC Sovereign Credit Overview’, said India’s ‘BBB-/negative’ credit “a stable medium-term strong outlook for growth and strong externalities with solid foreign reserves, high public debt, a weak financial outlook”. area and balances in comparison to some backward structural factors. The ‘negative’ outlook, it said, shows uncertainty over the path of credit following the sharp decline in India’s public finances due to the pandemic shock.
Previously estimated 10 percent
Fitch said it has lowered India’s gross domestic product (GDP) forecast for the fiscal year ending March 2022 to 8.7 per cent from 10 per cent reported in June Due to the severe second wave of the epidemic. In June, it lowered its growth forecast from 12.8 per cent to 10 per cent. The estimates for the fiscal year 2021-22 are compared with a contraction of 7.3 per cent recorded in the previous financial year and a growth of four per cent in 2019-20.
Growth rate forecast for 2022-23 raised
The rating company said, “In our view, however, India’s economic revival was delayed rather than derailed as a result of the second wave. In view of this, we have increased the GDP growth estimate of 8.5 percent for the financial year 2022-23 in June to 10 percent. 2021-March 2022), as business activity has returned to pre-pandemic levels.
Fiscal deficit is expected to be 6.8 percent
However, Fitch has expressed apprehensions of a widening fiscal deficit. He said, “We have estimated a deficit of 7.2 percent in GDP (excluding disinvestment) for the central government in the financial year 2021-22. In the budget for the financial year 2021-22, the fiscal deficit has been estimated at 6.8 percent in the current financial year.
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