Fitch Ratings on Friday followed the footsteps of its global peers, S&P and Moody’s, and lowered its outlook on India’s growth forecast to 5.1 per cent for FY 2020-21, saying the coronavirus outbreak is likely to hit business investment and exports. In December 2019, Fitch had projected India’s growth at 5.6 per cent for the financial year starting April 1 and 6.5 per cent in the following year.

However, on Friday, Fitch chopped India’s growth rate to a new low after taking the note of the impact of the pandemic on business investments and exports.

“Supply-chain disruptions are expected to hit business investment and exports. We see GDP growth to remain broadly steady at 5.1 per cent in the fiscal year 2020-2021 following growth of 5.0 per cent in 2019-2020,” Fitch said.

In its Global Economic Outlook 2020, Fitch said the number of people affected by coronavirus will keep rising in the coming weeks but the outbreak will remain contained. However, there are downside risks to this scenario.

“The outbreak of the virus is hitting sentiment, while local governments have rolled out measures to contain the spread of the virus, such as closing schools, cinemas and theatres. While India’s linkages with China (e.g. trade and tourism) are modest, manufacturers in India are heavily reliant on key Chinese intermediate inputs – especially of electronics and machinery and equipment,” said Fitch adding that the difficulties facing the Indian economy have been exacerbated by Yes Bank failure.

“Fragilities in the financial system will further undermine sentiment and domestic spending. The overall financial system remains burdened with weak balance sheets, which will limit any upside to credit and growth despite policymakers’ efforts in recent months to ease stresses,” Fitch added.

Last week, Moody’s Investors Service revised its baseline growth outlook for India from 5.4 per cent to 5.3 per cent, saying that there was significant economic fallout from a more rapid and wider spread of the coronavirus.

Similarly, on Thursday S&P lowered India’s growth forecast to 5.2 per cent from previously predicted-5.7 per cent estimated earlier for 2020.

(With input from agencies)