Fitch cuts India's growth forecast to 7.2% for FY19

Few days after the Central Statistics Office showed that India’s economic growth slowed down to 7.1% in Q2 FY19, credit rating agency, Fitch Ratings in its latest report has cut the Gross Domestic Product (GDP) growth forecast of the country to 7.2% for current fiscal (FY19), citing higher financing cost and reduced credit availability.

The rating agency also made growth projections for the next two years, 2019-20 and 2020-21. Fitch said India may grow at rate of 7% in 2019-20 and 7.1% in 2020-21. It said GDP growth softened quite substantially in July-September quarter of current fiscal growing by 7.1%, as against 8.2% in April-June.

Fitch Further said that consumption was the weak spot, stepping down from 8.6% to 7.0%, though still growing at a healthy rate. Other components of domestic demand fared well, notably investment, which has been steadily strengthening since 2H17. The external sector was again a significant drag on overall GDP amid steadily accelerating imports. Besides, it hopes that India's fiscal policy would continue to support growth in the run-up to elections in early 2019 and further forecast Indian rupee to weaken to 75 to a dollar by end of 2019.