Mumbai, June 18:

Global rating agency Fitch on Monday cut India’s GDP growth rate forecast for FY20 by 20 bps to 6.6 per cent, even as it retained FY21 estimate at 7.1 per cent, TV news channel CNBC TV18 reported. Earlier this year, Fitch Ratings had slashed India’s growth forecast for the next financial year beginning April 1, to 6.8 per cent from its previous estimate of 7 per cent. It had then cited weaker than expected momentum in the economy behind the cut.

“This is the lowest growth outturn in five years. The slowdown over the past year has been driven by steadily cooling activity in the manufacturing sector and, to a lesser extent, agriculture. Weaker momentum has been mainly domestically driven, though export growth has also faltered more recently,” Fitch said.

Trade war

The global rating agency also said that the trade war is causing collateral damage to global economic outlook.  The tariff on 28 items exported from the US have been increased by India for its products from 5 June. Already, the US and China are in the middle of a trade war, raising growth concerns of the world economy. Several experts have already said that the ingoing trade war may harm prospects of the global economy both in the short as well as long run.

RBI rate cut

On rate cut, the rating agency said that there is a scope for another 25 bps repo rate cut by RBI  in 2019, it added. In its June monetary policy committee (MPC) review, the central bank had cut rate by 25 bps, the third cut this year, so as to increase liquidity in the system. For the ongoing fiscal year, it was the second rate cut by the RBI.