Rating agency Fitch Ratings has cut its GDP growth forecast for the current fiscal to 8.7%.
The GDP growth forecast for the fiscal year 2023 has been raised to 10%. The rating agency says that the recovery of the economy will be delayed due to the second wave of coronavirus infections.
Fitch Ratings, in its APAC sovereign credit overview, said India's BBB-/negative sovereign rating is expected to balance still-strong medium-term growth.
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There is little respite from the buffer of foreign exchange reserves against high government debt, weak financial system and backward infrastructural factors.
Said the negative outlook shows that government debt has increased significantly following a sharp decline in India's financial system due to the shock of the pandemic.
Fitch Ratings had estimated in June this year that India's GDP growth could be 10% in the fiscal year 2022. However, now Fitch has reduced it to 8.7%.
The reason for this is the second wave of coronavirus infection. Earlier in June, Fitch had reduced the GDP growth rate for the fiscal year 2022 from 12.8% to 10%.