Fitch raises India's GDP forecast to 7.8% from 7.4% for FY19

Fitch Ratings in its Global Economic Outlook has revised up India’s growth forecast for current fiscal year (2018-19) to 7.8% from 7.4% projected earlier. However it has flagged tightening of financial conditions, weak bank balance sheets and rising oil bill as headwinds to growth.
Key Highlights
Growth Projections: Fitch’s upward revision in growth forecast comes in backdrop of GDP expanding 8.2% in the April-June period, higher than its expectation of 7.7%. This robust performance was partly attributable to a powerful base effect, with GDP growth dampened in 2Q17 (April-June) by companies de-stocking ahead of rollout of goods and services tax (GST). It has however cut growth forecasts for FY 2019-2020 and FY 2020-2021 growth by 0.2 percentage points to 7.3%.
Inflation Forecast: It is also picking up to upper part of Reserve Bank of India’s (RBI) target band (4%, plus-minus 2%) within forecast horizon on relatively high demand-pull pressures and rupee depreciation.
Rupee: It has been worst-performing major Asian currency so far this year. Despite RBI’s greater tolerance for currency depreciation, interest rates have been raised to higher levels, more than anticipated.
Fiscal policy: It should remain quite supportive of growth in run-up to elections likely to be held in early 2019. The investment to GDP ratio has stopped trending down, helped by ramped-up public infrastructure outlays, in particular by state-owned enterprises (SOEs).
Fitch Ratings
It is one of Big Three credit rating agencies in the world, the other two being Moody’s and Standard & Poor’s. Fitch Ratings is smallest of the “big three”. It is headquartered in New York (US) and completely owned by Hearst Corporation.
Tags: Business, IndiaCredit rating agency is company that assigns credit ratings, which rate debtor’s ability to pay back debt by making timely interest payments and likelihood of default.