US-based credit rating agency Fitch Ratings on Friday revised India's GDP forecast to 6.4 percent to 7 percent.
This cut comes after the Reserve Bank, in its recent monetary policy committee (MPC) meeting, revised India's growth forecast to 6.6 percent from 7.2 percent.
Fitch expects the GDP to rise by 6.4 percent in FY25 (2014-25) and 6.5 percent in FY26, slowing from 8.2 percent in FY24.
The rating agency, however, feels that India is doing relatively better than its global peers. “The Indian economy recovered strongly from the Covid-19 pandemic shock. Although indicators point to a more mixed picture in recent months, we do not think that the softness will translate into a prolonged slump in economic activity,” Fitch said in its report.
Domestic demand will continue to promote growth in the Indian economy amid the potential trade war between the United States and China along with the slowdown of global trade.
The continuity of policies such as infrastructure drive, digitalisation, and ease of doing business measures has driven growth in key sectors even as the government follows a fiscal consolidation approach, Fitch said.
The capital expenditure of public infrastructure will continue to support the economy and the assets that are directly related to this sector. The healthy performance of banks and corporate balance sheets in recent years will bring investments and quicker capital spending in the economy, according to the rating agency.
In the July-September quarter of FY25, the Indian economy grew 5.4 percent, which is lower than the RBI's forecast of 7 percent. In the April-June quarter, the Indian economy grew 6.7 percent, lower than RBI's expectations.
According to the Economic Survey released this year, India's real GDP growth was projected at 6.5-7 percent for FY25, saying that the market expected higher numbers. The real GDP growth takes into account inflation as well.
In FY24, India's GDP grew 8.2 percent, making its mark as one of the fastest-growing economies in the world. In FY23, the economy grew 7.2 percent and it grew 8.7 percent in FY22.
(By arrangement with livemint.com)