Fitch Ratings on Tuesday forecast a 5 per cent contraction of Indian economy in the current fiscal, on account of slump in economic activities and very stringent lockdown policy. “India has had a very stringent lockdown policy that has lasted a lot longer than initially expected and incoming economic activity data have been spectacularly weak,” Fitch said.
Fitch said it has made further cuts to world GDP forecasts in its latest Global Economic Outlook (GEO) for May, but the slump in global economic activity is close to reaching its trough.
“The biggest forecast cut was to India where we now anticipate a 5 per cent decline in the current financial year (ending March 2021) in contrast to an earlier forecast of growth of 0.8 per cent.
Fitch’s revised forecast for the Indian economy is substantially lower than 0.8 per cent growth for 2020-21 fiscal projected in April.
This compares to an estimated 3.9 per cent growth in the previous fiscal.
However, growth is expected to rebound to 9.5 per cent in 2021-22.