The rating agency said the GDP growth of 13.5 per cent in April-June, as per official data, was below its June expectation of 18.5 per cent increase.
Fitch cuts economic growth forecast to 7.8 per cent; revises India rating outlook to 'Stable' from 'Negative'
"The Outlook revision reflects our view that downside risks to medium-term growth have diminished due to India's rapid economic recovery," it said.
Fitch said the post-COVID-19 pandemic recovery is being hit by a potentially huge global supply shock that will reduce growth and push up inflation.
The report expects earnings and profitability of banks to recover next fiscal on the back of falling loan impairment charges that improved to 1.2 per cent in H1 of FY22, from 1.7 per cent a year ago.
It said that, in turn, it will weaken the country's finances and slow its economy, further raising geopolitical risks and uncertainty.
In the Budget for 2021-22, Sitharaman unveiled a massive spending plan, which would be met partly from enhanced borrowings, to pull the economy out of the trough.
This is its biggest single session fall since August 24, 2015, when it had lost 1,624.51 points.
The new entrant in the telecom industry, Reliance Jio, is expected to shift its approach from a hunter to a farmer by 2018, said Nitin Soni, Director at Fitch Ratings.