Indian Economy: Rating Agency Fitch Reduced The GDP Growth Rate

Indian Economy: Rating agency Fitch has reduced the GDP growth rate, but the pace is slow due to the global situation.

US rating agency Fitch has cut India’s growth forecast for the fiscal year 2022-23 to 7 percent. Earlier it was 7.8 percent in the figure given in June 2022.

The rating agency believes that the Indian economy may slow down further. In view of this, the growth rate of the economy has been reduced from 7.4 percent to 6.7 percent for the financial year 2023-24.

Fitch says that in the second quarter of this year, the Indian economy registered a year-on-year growth of 13.5 percent, which is much lower than the 18.5 percent estimated in June.

On a quarter-on-quarter basis, Q2 of 2022 has seen a decline of 3.3 percent and this is in contrast to our high-frequency signals.

We expect the Indian economy to slow down due to the slowing global economy, rising inflation, and rising interest rates.

RBI may increase the interest rate.

Fitch believes that the Reserve Bank of India (RBI) will continue to increase interest rates. Keeping in mind the rising inflation, the RBI can increase the repo rate to 5.9 percent in the coming time.

It is possible that soon the repo rate will reach its highest level and it will continue for the next full financial year.

The growth rate of the global economy.

Fitch lowered the growth forecast for the global economy, saying that we are reducing it by 0.5 percent to 2.4 percent for 2022.

He further said that we believe that the global economy can grow at 1.7 percent in 2023.

In order to check inflation, interest rates may increase again in the next meeting of RBI, and MPC.

After the rise in retail inflation in August, analysts have started anticipating an interest rate hike by the RBI.

In the latest estimates, analysts believe that the central bank may increase the interest rate by 50 basis points, or 0.50 percent, in the MPC meeting to be held later this September.

The biggest reason behind increasing interest rates is going to be the rising inflation in the country.

According to the August retail inflation data released by the government, inflation in the country has increased from 6.7 percent in July to 7 percent in August and it is in the inflation band 2-6 fixed by the RBI.

One percent more than one percent. The biggest reason behind the rise in inflation in August was the rise in the prices of food items.