Fitch cuts India GDP growth forecast for FY20 to 6.8%

  1. Global rating agency Fitch has cut its India’s Gross domestic product(GDP) growth forecast to 6.8% for 2019-20 from the earlier estimate of 7%.It was cut due to weak momentum in manufacturing and agriculture.However,it said India’s economic growth is expected to be 7.1% in 2020-21.
  2. The weak momentum has been due to (a)credit availability has tightened up in areas heavily dependent on non-bank financial company(NBFC) credit like autos and two-wheelers where sales have dropped and (b)food inflation has been muted and fell into negative territory weighing on farmers incomes. However, capital infusion and a looser regulatory stance of the Reserve Bank of India (RBI) have eased the state banks capital constraints.
  3. Fitch has also cut its global economic forecasts for 2019.It projected growth forecast for 2019 at 2.8% from 3.1% projected earlier.However,it retained China’s growth projections at 6.6% in 2018 and 6.1% in 2019.
  4. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.GDP includes (a)all private and public consumption (b) government outlays (c)investments (d)private inventories (e)paid-in construction costs and the (f)foreign balance of trade(exports are added,imports are subtracted).
  5. Fitch Ratings is an international credit rating agency based out of New York City and London.It is a leading provider of credit ratings, commentary and research.Along with Moody’s and Standard & Poor’s, Fitch is one of the top three credit rating agencies