Fitch Ratings on Friday said it has slashed India’s growth forecast for the current fiscal to a 30-year low of 2 per cent from 5.1 per cent projected earlier as economic recession has gripped the global economy following the lockdown for the Covid-19 pandemic.

Last week, Moody's Investors Service sharply cut India's growth forecast for calendar 2020 to 2.5 per cent from 5.3 per cent estimated earlier.

“The initial disruptions to regional manufacturing supply chains from a lockdown in China as the coronavirus spread have now broadened to include local discretionary spending and exports even as parts of China return to work.

“Fitch now expects a global recession this year and has recently cut the GDP growth forecast for India to 2 per cent for the year ending March 2021 after lowering it to 5.1 per cent previously, which would make it the slowest growth in India over the past 30 years,” it said in a statement.

On March 20, Fitch had projected India’s GDP growth for 2020-21 at 5.1 per cent, lower than 5.6 per cent estimated in December 2019.

Fitch also said micro, small and medium-sized enterprises and the services segment are likely to be among the most affected because of reduced consumer spending.

NBFCs’ business borrowers are typically smaller with more limited cash buffers, and any material fall in earnings is likely to affect their ability to repay their loans directly, it said in the statement.

“The challenges for India’s non-bank financial institutions (NBFI) will intensify as local measures to contain the spread of the coronavirus exert pressure on their operating performance and financial profiles.

“Government-imposed activity restrictions in India will raise operational complications for the NBFIs, while any escalation in local infections would deal a blow to economic sentiment, the agency said.

“These developments threaten to derail the incipient recovery in India’s credit environment following the NBFI crisis in 2018-19, and Fitch has taken negative action on our rated Indian NBFI portfolio in light of these risks,” Fitch said.

The RWN (rating watch negative) placed on the ratings of Fitch-rated Indian NBFIs reflects heightened uncertainty over their credit profiles due to the authorities’ measures to contain the spread of Covid-19, it added.