CHENNAI: India’s economy may be rebounding but the pace of growth is weaker than expected, according to global ratings agency Fitch, which on Monday cut the country’s GDP growth forecast for FY18 to 6.7 per cent from its earlier projection of 6.9 per cent. The ratings agency also cut growth forecast for the next fiscal, FY19, to 7.3 per cent from 7.4 per cent it had predicted earlier.
Fitch is, however, hopeful of a pick-up in India’s growth rate in the next two years on the back of the government’s gradual implementation of its structural reform agenda and higher real disposable income.
Noting that growth has ‘repeatedly disappointed’ in recent times due to disruptions in the economy, it observed that the economy bounced back from a three-year low to expand by 6.3 per cent in the July-September quarter with manufacturing picking up and businesses adjusting to the new indirect tax regime.
“Recent moves by the government should help support the growth outlook and enhance business confidence,” it said.
Fitch is of the opinion that the two-year bank recapitalisation plan of Rs 2.1 lakh crore will help address the capital shortages that have hindered the banks’ lending capacity. Also helping the economy, according to the ratings agency, will be the Rs 6.9 lakh crore road construction plan.On global growth, the ratings agency said pick-up has been better than expected. It forecast 3.2 per cent expansion this year and 3.3 per cent next year.