Fitch Ratings has slashed India's Gross Domestic Product (GDP) growth forecast for the current financial year (FY20) to 5.5% as compared to 6.6% forecasted in June for FY20. It said that the Indian economy is being held back by a large squeeze in credit availability emanating from non-bank financial companies (NBFCs).
He also added weakness has been fairly broad-based, with both domestic spending and external demand losing momentum. It mentioned that the recent government measures to boost economy including a cut in corporate tax rates will gradually nudge growth. The projection is lower than 6.1% that the Reserve Bank of India (RBI) had forecast in early October.
Further, it is expecting that GDP expansion will pick up to 6.2% in the next financial year (FY21) and to 6.7% in the year after. The Indian economy decelerated for the fifth consecutive quarter in April-June, with GDP expanding by a meagre 5%, down from 8% recorded a year earlier. This is the lowest growth outturn since 2013.