NEW DELHI: FITCH Ratings on Tuesday has downgraded India’s economic growth forecast at 6.6 per cent in the current fiscal, down from 6.8 per cent in the previous year owing to faltering domestic demand and weak global cues.
“Domestic demand is faltering, with both private consumption and investment proving lacklustre, while the global trade environment is also weak,” it said. According to the rating agency, the contribution of gross fixed capital formation (1.3 per cent) remained weak at the same level of the January-March quarter, when it dropped sharply, while the contribution of private consumption fell to 1.8 per cent in April-June from an average of 4.6 per cent in the preceding four quarters.
Manufacturing grew by only 0.6 per cent.
The report also flagged concern over high debt which allows only limited room for the government to ease fiscal policy.
“There is only limited room to ease fiscal policy, given the high public debt,” it said, adding “The FY20 Budget, presented in July, pointed broadly to policy continuity after the landslide win of Prime Minister (Narendra) Modi’s BJP in the elections of April and May 2019. The Budget avoids fiscal loosening, but also falls short of signalling fiscal consolidation in the coming years.” GDP growth is likely to rebound to 7.1 per cent next year, it said.