Ratings agency Fitch has cut outlook for Indian’s economy to negative as the country’s growth faces “heightened risks”. The concern is India’s growth potential “will gradually deteriorate if further structural reforms are not hastened” and the Indian government had made little progress on reducing its deficit.
The downgrade comes just days after Standard & Poor’s warned that India could lose its investment grade status.
“India also faces structural challenges surrounding its investment climate in the form of corruption and inadequate economic reforms,” Fitch said in a statement on Monday.
India’s economy grew at an annual rate of 5.3% in the first quarter, which is the slowest pace in nine years. There are fears that growth may slow further in the near term amid increased global volatility.
To make matters worse, on Monday, the Reserve Bank of India (RBI) left its key interest rate unchanged despite pressure on it to lower borrowing costs. The reason given was high inflation.
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