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Fitch slashes India growth forecast to 7.2 percent on reduced credit availability

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New Delhi | Fitch Ratings Thursday slashed India’s GDP growth forecast to 7.2 percent for current fiscal, from 7.8 percent projected in September, citing higher financing cost and reduced credit availability.

In its Global Economic Outlook released Thursday, Fitch estimated India’s GDP growth to be 7 percent and 7.1 percent in financial years 2019-20 and 2020-21 respectively. Indian economy grew 6.7 percent in 2017-18 fiscal.

The 7.2 percent GDP growth for current fiscal is substantially lower than 7.8 percent and 7.4 percent projections made by Fitch in September and June respectively. It is also lower than RBI’s 7.4 percent growth estimates for this fiscal.

“We have lowered our growth forecasts on weaker-than-expected momentum in the data (GDP), higher financing costs and reduced credit availability. We now see GDP growth at 7.2 percent in the fiscal year ending March 2019 (FY19), followed by 7.0 percent in FY20 and 7.1 percent in FY21,” Fitch said.

In September, the rating agency had forecast 2019-20 and 2020-21 GDP growth at 7.3 percent. Fitch said GDP growth has “softened quite substantially” in July-September quarter of current fiscal growing by 7.1 percent, as against 8.2 percent in April-June.

“Consumption was the weak spot, stepping down from 8.6 percent to 7 percent, though still growing at a healthy rate. Other components of domestic demand fared well, notably investment, which has been steadily strengthening since 2H17. The external sector was again a significant drag on overall GDP amid steadily accelerating imports, Fitch said.

The global rating agency said India’s fiscal policy should continue to support growth in the run-up to elections in early 2019 and forecast Indian rupee to weaken to 75 to a dollar by end of 2019. The rupee is currently hovering around 71 per dollar mark.

“Stepped-up public investment has helped to stem the downward trend in the investment/GDP ratio, boosted by infrastructure spending. There have also been measures to support rural demand,” it added.

It said the banking sector is still struggling with a high proportion of non-performing assets, while non-banking financial institutions (NBFIs) are facing tighter access to liquidity following the default of IL&FS, one of the 30 biggest NBFIs in India.

NFBIs have accounted for a large share of all lending in recent years and have expanded credit rapidly, it said.

“So far, the Reserve Bank of India (RBI) has dismissed calls by the government to provide emergency liquidity and to ease lending restrictions on the maximum volume of lending that state-run banks can provide to NBFIs,” Fitch added. Fitch said it expects inflation to edge up mildly in the coming months, on normalising food prices and higher import prices stemming from the depreciation of rupee.

“The widening of the current account deficit amidst tighter global financing conditions should put downward pressure on the currency, and we forecast the INR to weaken to 75 against the dollar by end-2019,” it said.

Fitch, however, retained its global GDP forecasts for 2018 and 2019 at 3.3 percent this year and 3.1 percent next year. It also retained China’s growth projections at 6.6 per cent in 2018 and 6.1 percent in 2019.

With regard to crude prices, Fitch expect oil prices to recover somewhat from current levels, with OPEC likely to agree to some production cuts at its early December meeting.

“Our 2018 annual average estimate has been raised slightly to USD 72.5 per barrel to reflect year-to-date out-turns but our 2019 assumption is unchanged at USD 65. In the medium term, we have become a little more confident in the ability of OPEC+ (including Opec and non-Opec oil majors) and to help stabilise prices,” Fitch said.

The 2020 oil price forecast has been revised upwards to USD 62.5 from USD 57.5 projected in September outlook of Fitch. The price of Indian basket of crude oil fell below USD 60 to a barrel by end November, from USD 85 to a barrel in early October.

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India invited as ‘Guest of Honour’ to OIC meet, Sushma Swaraj to attend

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Official sources said it was for the first time, India has been invited to an Organisation of Islamic Cooperation (OIC) meeting as a guest of honour.

 

New Delhi| In a significant move, India has been invited to the inaugural plenary of the foreign ministers’ conclave of the OIC, a powerful grouping of Muslim majority nations, and External Affairs Minister Sushma Swaraj will attend it in Abu Dhabi next month as the ‘guest of honour’.

The Ministry of External Affairs (MEA) called the invitation a “welcome recognition” of the presence of 185 million Muslims in India and of their contribution to its pluralistic ethos, and of India’s contribution to the Islamic world.

Official sources said it was for the first time, India has been invited to an Organisation of Islamic Cooperation (OIC) meeting as a guest of honour. The 46th Session of the OIC’s Council of Foreign Ministers will be held in Abu Dhabi from March 1 to 2.

The invitation to India by the OIC comes at a time when India has been mounting a diplomatic offensive against Pakistan to isolate it internationally following the Pulwama terror attack in which 40 CRPF personnel were killed.

The OIC has usually been supportive of Pakistan and, often sided with Islamabad on the Kashmir issue.

The MEA said Foreign Minister of United Arab Emirates Sheikh Abdullah bin Zayed Al Nahyan invited Swaraj as the ‘guest of honour’ to address the inaugural plenary and that India was happy to accept the invitation.

“We see this invitation as the desire of the enlightened leadership of the UAE to go beyond our rapidly growing close bilateral ties and forge a true multifaceted partnership at the multilateral and international level,” the MEA said in a release.

“We see this invitation as a milestone in our comprehensive strategic partnership with the UAE. We also see this invitation as a welcome recognition of the presence of 185 million Muslims in India and of their contribution to its pluralistic ethos, and of India’s contribution to the Islamic world,” it said.

India is, therefore, happy to accept the invitation and thanked the leadership of the UAE for it, the ministry said.

Last year, Bangladesh proposed a restructuring of the charter of the Organisation of Islamic Cooperation to pave way for the inclusion of non-Muslim countries like India as an “observer state” of the 50-year old grouping.

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Assam hooch tragedy death toll mounts to 59, 200 taken ill

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Jorhat| At least 59 people have died and over 200 taken ill after consuming spurious liquor in tea gardens in Assam‘s Golaghat and Jorhat since Thursday night, Health Minister Himanta Biswa Sarma said on Saturday.

The death toll is rising every minute, the minister said after visiting Jorhat Medical College Hospital (JMCH) here.

“This morning the death toll in Golaghat and Jorhat districts was 59 and 200 people have been admitted to hospitals. The death toll and the number of people admitted are changing minute by minute,” Sarma told reporters after meeting some patients at the hospital.

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100 cars gutted in fire at Aero India 2019 show in Bengaluru

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Bengaluru | More than 100 cars have been gutted in to fire at the parking lot near the Aero India Show held at the Yelahankha air base in Bengaluru.

According to a local eye witness, a grass fire spread to parking area number 5 and some vehicles which were parked there have also caught fire. The fire department has stated that around 80-100 cars gutted in fire near the venue of the Aero India Show in Bengaluru.

 

Officials stated that around 10 fire engines have rushed to the spot. Responding on the incident Senior police official MNReddi tweeted, “Fire in the open field parking lot of aero show. Nearly 20 cars burnt. Fire fighting operations by Chief Fire Officer and 10 water tenders staff underway.”

Earlier on Tuesday, one fighter pilot was killed after two Surya Kiran Aircraft crashed during the rehearsal of the Aero India Show.

 

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