Fitch Ratings on Friday cut its growth forecast for India to 4.6 per cent for 2019-20 from the previous estimation of 5.6 per cent after factoring in significant deceleration in the past few quarters because of a credit squeeze and deterioration in business and consumer confidence.

It reaffirmed India’s rating at ‘BBB-’ with a stable outlook saying the rating balances a still strong medium-term growth outlook compared with similar category peers and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors.

Fitch’s 2019-20 growth forecast is lower than the 4.9 per cent projection by Moody’s and 5.1 per cent by Asian Development Bank. The RBI has also revised its GDP growth forecast to 5 per cent for 2019-20 from 6.1 per cent projected in October.

“Our outlook on India’s growth is still solid against that of peers, even though growth has decelerated over the past few quarters, mainly due to domestic factors, in particular, a squeeze in credit availability from NBFCs and deterioration in business and consumer confidence,” Fitch said.

Deficit target

IMF chief economist Gita Gopinath on Friday said India needs to keep its fiscal deficit target, which would require expenditure rationalisation and increased revenue mobilisation. She said in the past few quarters, there has been a steep slowdown in private sector demand and there is now weakness in investment. A prolonged weakness in investment will affect potential growth, she stressed.