Global ratings agency Fitch Ratings in its latest release has said that India's economic growth is expected to pick up to 5.6 percent in the current fiscal on account of structural reforms being rolled-out by the government.
The agency expects real GDP growth to pick up to 5.6 percent in FY15 and 6.5 percent in FY16 from 4.7 percent in FY14 and has stated that high foreign reserves provide a strong buffer to the Indian economy. Fitch has further stated that the Indian economy had lost much of its dynamism in recent years due to weak investment, however, a gradual pick-up is expected now. In its report it has highlighted that India's current account deficit (CAD) was a concern for investors until mid of 2013, but it has narrowed now due to policy rates hikes and measures including curbs on gold imports through duty hikes.
Though, cautioning about factors such as pace of fiscal consolidation and structural reforms, investment and inflation environment as well as banking sector's asset quality, it has said that they form downside risks to the economy. India's fiscal deficit touched 82.6 per cent of the Budget estimates for 2014-15 to cross Rs 4.38 lakh crore at the end of September.
Recently, the domestic ratings agency India Ratings, a part of Fitch Ratings had revised down its economic growth estimate for fiscal year 2014-15 marginally to 5.6 per cent citing poor industrial performance, and warned that the government will slip on the fiscal deficit front.
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