Global rating agency Fitch lowered India's economic growth projections to 7.8 percent for the current fiscal from 8 percent on pickup in demand and said that the country’s business environment is relatively weak compared with peers and will take time to turn around. In its Global Growth Outlook report, it said that Fitch continues to expect an acceleration in Indian growth, but there are some indications that it may be somewhat slower than previously expected.
In its report the rating agency has cited that capital expenditure has not yet picked up, rural and export demand is weak, and the translation of monetary policy loosening into lower bank lending rates is limited. Downside risks to growth relate, for instance, to below-average rainfall during this year’s monsoon season, although the first three weeks of June recorded 16 per cent above-average rainfall.
Though, the rating agency maintained the expectation for an increase in growth, it lowered its real GDP growth forecasts for India to 7.8 percent and 8.1 percent from 8.0 percent and 8.3 percent for FY16 and FY17, respectively. It said that India’s GDP growth will surpass China’s this year for the first time since 1999, and accelerate to 8 per cent in 2016 and 8.1 per cent in 2017 before settling back to 8.0 per cent in 2017-18. It added that “The implementation of structural reforms and resulting pick-up in investment remain key themes for India's growth outlook, and recent data confirm the strengthening demand.”
Regarding global economy, it said that emerging Asia will continue to experience relatively high rates of growth over the medium term as economic prospects remain starkly divergent across emerging markets. It expects that growth should improve steadily through to 2017 for emerging Asia excluding China on aggregate.