Fitch slashes India growth forecast for FY14 to 4.8 percent

New Delhi: Fitch Ratings cut India’s growth forecast for the current financial year to 4.8 percent, saying weak demand is a large drag on the economy.

The new estimate compares with projections of 5.7 percent made in June and 7 percent in September, underlining the “severity of the growth shock,” the rating agency said in its ‘Global Economic Outlook’ report released on Thursday.

Fitch said prospects of a swift economic turnaround have been further dented by a 20 percent fall in the domestic currency since the end of May due to increased concerns over the country’s large current account deficit.

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The sharp cut in the growth forecast comes when the country faces challenges such as slowing growth, exchange-rate woes and concerns about the current account deficit. India’s economy expanded at a 4.4 percent pace in the April-June quarter compared with 4.8 percent in January-March.

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“Demand is weak, both externally and domestically, which is a large drag on the economy,” the agency said Fitch also cut India’s growth rate projection for FY'15 to 5.8 per cent from the June forecast of 6.5 percent.

In September 2012, the company had projected a growth of 7.5 percent for FY'15.

Last week, the Prime Minister’s Economic Advisory Council had revised its growth forecast for the current financial year to 5.3 percent from 6.4 percent projected earlier.

PTI