New Delhi: Noting that 'band-aid' measures would not help the economy as it faces several cyclical and structural issues, Fitch group firm India Ratings and Research has lowered its GDP growth forecast to six-year low at 6.7% in the current fiscal as against 7.3% projected earlier.
With most engines of growth stuttering, the economic slowdown would continue and the April-June GDP figure could slip to 5.7%. The research and rating agency said that it would be the fifth consecutive quarter of declining growth.
The agency does not see private investment, one of the key drivers of economic growth, picking up anytime soon as manufacturing sector capacity utilisation has hovered in the range of 70-76% since FY14 and unless it reaches optimum level, no company would make investments. Further, the stress in the real estate sector continues.
Sunil Kumar Sinha, Principal Economist and Director (public finance) at the ratings firm, said hoping that government expenditure alone would change the investment landscape would be expecting too much.
The slowing economy could also mean businesses failing and hence a rise in non-performing assets (NPAs) of banks.
Among the factors pulling down growth are slowdown in consumption, delayed and uneven progress of monsoon, decline in manufacturing, inability of Insolvency and Bankruptcy Code (IBC) to resolve cases in a time-bound manner and rising global trade tension impacting exports.