InvestorQ : Why has Fitch cut India’s growth forecast for the fiscal year 2021-22?
Lavanya Subramanian made post

Why has Fitch cut India’s growth forecast for the fiscal year 2021-22?

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Anamika Sodhani answered.
2 months ago
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Just a couple of days after Moody’s chose to upgrade India’s rating outlook from Negative to stable, Fitch opted to hold India’s rating outlook at negative. Fitch now remains the only rating agency to have a low investment grade rating for India plus negative outlook. Both S&P and Moody’s have maintained stable outlook for India. Fitch has cited long-term impact of COVID 2.0 as a key reason which could back-end growth.

Interestingly, Fitch has decided to upgrade the growth forecast for FY23 from 8.5% to 10%. Another reason cited by Fitch is the high fiscal deficit. It has also pointed to rising debt levels and slower than expected GDP growth as key risks. Fitch has downsized the FY22 growth from 10% to 8.7%, a 130 bps cut in growth forecast. Another major risk that Fitch pointed to is high inflation levels, but most of these were documented by Fitch as well.

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