Negative Revision in GDP Rates as Consumption and Manufacturing Slow Down in Domestic Market
Fitch Solutions, a renowned credit rating agency, revised its forecast for India Economic Growth to 4.9 from 5.1 per cent for the ongoing fiscal year ending on March 31, 2020. According to the company, decelerated GDP in the current fiscal year is an outcome of persistent slowdown in automotive sector followed by trade disruption of automotive and electronic durables from China as knock-on effect of Coronavirus outbreak. As China accounts for a significant percentage of input durables and raw material supply required in manufacturing, trade disruptions have slowed down the manufacturing in several industrial sectors in India further leading to rise in unemployment. However, Fitch Solutions forecasted a growth in GDP to 5.4 per cent in the next financial year as containment in outspread of Covid-19 from June is anticipated to provide a substantial improvement in the economic activity by resuming the production in several manufacturing industries. Moreover, prediction of better monsoon is expected to provide the required recovery to Agricultural sector resulting a positive effect on the overall economy of the country.