Ratings firm Fitch cut India's growth forecast for the current fiscal to 6% from 6.5% estimated earlier, citing a challenging growth environment. Standard & Poor's has already lowered growth target to 5.5%. Both the agencies have put India's sovereign rating on watch, warning it could be cut to junk grade from just investment grade now. "India's economic outlook remains challenging. The projections for real GDP growth (has been trimmed) to 6% for FY12-13 from a previous estimate of 6.5%," Fitch said in its Global Economic Outlook report. India's GDP growth dropped to 5.5% in April-June quarter. Fitch has said the high fiscal deficitleaves little room for government to revive growth through spending.
The ratings agency welcomed the government's recent reform push that include decision to allow foreign direct investment in multibrand retail, raise fuel prices and ease foreign borrowing-.Fitch said the high inflation does not give RBI room to cut interest rates. |
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