Amid cooling activity in the manufacturing and agriculture sector, credit rating agency Fitch Ratings in its latest Global Economic Outlook, has slashed India's growth forecast to 6.6% for the current financial year from 6.8% projected earlier.
According to the Fitch, the Reserve Bank of India (RBI) is likely to cut interest rate by another 25 basis points later in 2019, which will push the policy repo rate down to 5.50%. It also said that monetary and regulatory easing from the RBI, along with a recovery in portfolio inflows, should support a recovery in credit to the private sector and reverse the drag from the negative credit impulse.
However, the agency retained its gross domestic product (GDP) growth forecast for the next fiscal (2020-21) at 7.1% and 7.0% for 2021-22. Meanwhile, for the last fiscal (FY19), GDP growth stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%.
