Concern: oil prices, weak banks

Fitch Ratings has revised upward India’s economic growth forecast for the current fiscal year to 7.8%, from 7.4% projected earlier but with a cautious note on rising oil prices, weak banks and tightening financial conditions.

“We have revised up our forecast for FY2018-2019 growth to 7.8% from 7.4% on the back of the better-than-expected 2Q18 outturn. India’s growth likely peaked in 2Q18 (April-June) though,” Fitch said in its Global Economic Outlook on 21 Sept 2018.

The Indian rupee has been the worst-performing major Asian currency so far this year while interest rates have been raised by more than anticipated, despite the central bank’s greater tolerance for currency depreciation, it said.

The upward revision in growth forecast comes in the backdrop of Gross Domestic Product (GDP) expanding 8.2% in the April-June period, higher than Fitch’s expectation of 7.7%.

“Fiscal policy should remain quite supportive of growth in the run-up to elections likely to be held in early 2019. The investment/GDP ratio has stopped trending down, helped by ramped-up public infrastructure outlays, in particular by state-owned enterprises (SOEs),” it said. fiinews.com