Fitch lowers India's growth forecast to a 30-year low of 2% for fiscal year 21

NEW DELHI: Fitch Ratings On Friday, he said he cut India's growth forecast for the current 30-year low tax rate from 2 percent, from previously projected 5.1 percent, as the economic downturn gripped the global economy. after the closure due to the COVID-19 pandemic.

Initial disruptions to regional manufacturing supply chains due to a blockage in China as the coronavirus spread have now been expanded to include local discretionary spending and exports, even when parts of China return to work.

Fitch now expects a global recession this year and recently lowered our GDP (gross domestic product) growth forecast for India to 2 percent for the fiscal year ending March 2021, after reducing it to 5.1 percent previously, which It would make it the slowest growth in India in the past 30 years, it said in a statement.

On March 20, Fitch had projected India's 2020-21 GDP growth at 5.1 percent, lower than the 5.6 percent estimated in December 2019.

Fitch also said that micro, small and medium-sized businesses and the service segment are likely to be among the hardest hit amid reduced consumer spending.

NBFC's commercial borrowers are typically smaller, with more limited cash reserves, and any major drop 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 (NBFIs) will intensify as local measures to stem the spread of the coronavirus put pressure on their operating performance and financial profiles. Government-imposed activity restrictions in India will create operational complications for NBFIs, while any escalation in local infections would be a severe blow to economic sentiment.

These developments threaten to derail the incipient recovery in India's credit environment following the NBFI crisis in 2018-2019, and Fitch has taken negative steps on our NBFI portfolio in India in light of these risks, the agency said.

The RWN (negative observation rating) placed on the ratings of Fitch-rated Indian NBFIs reflects increased uncertainty about their credit profiles due to the authorities' measures to contain the spread of COVID-19, it added.

Last week, Moody's Investors Service drastically lowered India's growth forecast for the 2020 calendar to 2.5 percent from 5.3 percent previously estimated.