Global rating agency Fitch ratings has given shock to Modi’s Central government on the economic front. Fitch has reduced India’s GDP growth from 7.4% to 7.2%. This estimate has been issued for the current financial year (2018-19). In addition, Fitch has also questioned the economic policy of the Modi government. The ratings agency says that the GDP figures of India are not as expected and the estimation has been reduced considering the lack of cash in the market. In July-September, India’s GDP growth was 7.1%, in April-June it was 8.2%.
According to Fitch, India’s growth rate is expected to be 7% in the next financial year (2019-20) and 7.1% in the year 2020-21. The rating agency released a 7.5% growth forecast for the year 2019-20. Rating agency says that given the general elections next year, it is expected that India’s financial policies will continue to promote growth. According to Fitch, the rupee could fall to 75 against the dollar by the end of 2019.
According to Fitch, some components of domestic demand were good, especially in the investment segment. The investment has gradually strengthened since the second half of 2017. The banking sector is still struggling with high levels of NPAs, while non-banking financial institutions are facing the problem of liquidity deficiency following the defaults of IL & FS.