Fitch Ratings has cut India's growth forecast to 5.1 per cent for fiscal 2020-21, with COVID-19 pandemic likely to hit business investment and exports. It had projected India's growth at 5.6 per cent for 2020-21 last December. In its Global Economic Outlook, Fitch said the number of infected will rise but the outbreak will remain contained.
The agency states, supply-chain disruptions are expected to hit business investment and exports. GDP growth is likely to remain broadly steady at 5.1 per cent in the fiscal year 2020-2021 following growth of 5.0 per cent in 2019-2020. While India’s linkages with China are modest, manufacturers in India are heavily reliant on key Chinese intermediate inputs, especially of electronics and machinery and equipment.
The difficulties facing Indian economy have been exacerbated by Yes Bank failure. Fragilities in the financial system will further undermine sentiment and domestic spending. The overall financial system remains burdened with weak balance sheets, which will limit any upside to credit and growth despite policymakers'' efforts in recent months to ease stresses.