Rating agency Fitch reduced the GDP growth rate of India from 7.8 percent to 7.2 percent for the current fiscal. Due to the high cost and lack of credit availability, Fitch has reduced the estimate. Fitch said in Thursday's global economic scenario that India's economic growth rate in 2019-20 and 2020-21 is estimated to be 7 percent and 7.1 percent, respectively. Fitch has reduced its estimates due to lower growth in GDP data, high funding costs and decrease of credit availability.
In the financial year 2017-18, the country's economy had grown at a rate of 6.7 percent. Earlier, Fitch had projected growth of 7.8 percent in September and 7.4 percent in June. Fitch's new estimate is much lower than its earlier estimate of 7.4 percent for the current financial year.
Fitch said, "We have reduced our estimates due to the low growth in GDP figures, high funding costs and a decrease in credit availability. We believe that the GDP growth rate will be 7.2 percent for the fiscal year ended March 2019. It is estimated to be 7 percent in 2019-20 and 7.1 percent in 2020-21.
The agency said that in the second quarter (July-September) of the current financial year, the GDP growth rate was reduced to 7.1 percent. It was 8.2 percent in April-June.
Fitch said, "Consumption has remained weak, it has dropped from 8.6 percent to 7 percent. Other factors of domestic demand are in good condition, especially after the investment has increased steadily after the second half of 2017.
Rating agency says that given the next general elections due next year, India's fiscal policies will be favorable to boost growth. Also, by the end of the year 2019, the rupee could fall to 75 rupees per dollar. The rupee is currently running at around Rs 71 a dollar.