Fitch estimates that India’s GDP growth forecast for the current financial year will be 8.7 percent, up from 10 percent in the previous June, mainly due to the second wave of corona virus outbreaks.
At the same time, the company has raised its economic growth forecast for the coming financial year to 10 per cent i.e. 2022-23, as the second wave of epidemic in India has delayed economic recovery and has not reversed it.
In fact, Fitch’s 10 percent growth forecast for the current fiscal year was lower than its previous estimate of 12.8 percent.
Fitch, in its APAC Sovereign Credit Outlook, said India’s “PPP-negative” outlook reflects the uncertainty in the debt trajectory caused by the sharp fall in the country’s public funds, mainly affected by the epidemic.
The company said business operations returned to pre-epidemic levels in the second quarter of the current fiscal year.
At the same time, it expects to widen the fiscal deficit to 7.2 percent of GDP in the current fiscal year.
In an inflationary scenario, Fitch said it would be moderate and that this would allow the Reserve Bank of India (RBI) to maintain key interest rates at least until the next financial year.