Fitch Ratings has retained India’s GDP growth forecast for the current fiscal year at 6.3 percent. It was also said that despite tight monetary policy and weakness in exports, the Indian economy is showing resilience, although inflation estimates were raised at the end of the year due to the threat of El Niño. Let us tell you that the Indian economy grew by 7.8 percent in the April-June quarter of the current financial year due to robust service sector activity and robust demand.
What the report contains: According to the Fitch report, “Despite tight monetary policy and weakness in exports, the Indian economy is showing resilience and has outperformed other countries in terms of growth.” However, in its September upgrade of the Global Economic Outlook, Fitch said signs suggest that growth is likely to slow in the July-September quarter.
India is also not immune from the global economic recession
Fitch said, “India will not be immune to the global economic slowdown and the lagged impact of the RBI’s 250 bps hike last year will hit the domestic economy, while the poor Monsoon Weather may make inflation control difficult for RBI.” Consumer price index-based retail inflation was 6.8 percent in August after 7.4 percent in July and 4.9 percent in June.
“The increase in inflation in recent months was mainly due to a sharp increase in prices of tomatoes and other food products,” Fitch said. Despite the risk of higher food prices, Fitch maintained the RBI’s benchmark interest rate forecast of 6.5 percent till the end of 2023.