Fitch Ratings revises India’s growth estimate to 12.8% for next fiscal

American credit rating agency Fitch has revised India’s GDP growth estimate to 12.8% for next fiscal from the previous 11% on the back of a stronger carryover effect, a looser fiscal stance, and better virus containment.

The ratings agency, in its latest Global Economic Outlook GEO, anticipates the level of the country’s GDP to remain well below its pre-pandemic forecast trajectory. Fitch also expects GDP growth to ease to 5.8% in Fiscal Year 2023.

In a report it said, India’s recovery from the depths of the lockdown-induced recession in the second quarter of 2020 has been swifter than expected. GDP surpassed its pre-pandemic level in the fourth quarter of current fiscal.

It also added that High-frequency indicators point to a strong start to 2021. The manufacturing Purchasing Managers’ Index PMI remained elevated in February, while the pickup in mobility and a rise in the services PMI point to further gains in the services sector.

The ratings agency notes that it no longer expects the Reserve Bank of India (RBI) to cut its policy rate, owing to a brighter short-term growth outlook and a more limited decline in inflation than it had forecast.