Fitch cuts India growth forecast to 8 per cent for FY22

Fitch Ratings in its June update of Global Economic Outlook has cut India's growth forecast for the financial year 2021-22 to 8 per cent from 9.5 per cent projected last month.

However, the rating agency retained its projection of Indian economy contracting by 5 per cent in the current fiscal year i.e. FY21. It has projected Indian economy to grow by 5.5 per cent in 2022-23.

Fitch Ratings added, “In India, where authorities imposed one of the most stringent lockdowns globally to try to halt the spread of the virus, measures are being relaxed only very gradually; with a limited policy easing response and ongoing financial sector fragilities, we have pared our 2021 forecast to 8 per cent from 9.5 per cent in the previous GEO.”

Earlier, in May update to the outlook, Fitch had projected 9.5 per cent growth in 2021-22. It had projected confidence saying that Indian economy will bounce back from the prevailing contraction and slowdown largely on the back of COVID-19 pandemic while adding that India's GDP may grow at a healthy rate in the next fiscal year.