“It has not taken note of many recent structural reforms initiatives taken by the government, such as UIDAI, fertilizer subsidy reform, capping subsidies as a fraction of GDP, new manufacturing policy, new telecom policy,” a finance ministry release said.
The minister, however, acknowledged that the report highlighted various positive factors about the Indian economy, such as “strong economic and credit fundamentals”, “diversified economy”, “high domestic savings”, very low “net external debt”, “high foreign exchange reserves”, and that “underlying drivers of the last decade of rapid economic growth remain in place—a fast growing pool of educated workers and an innovative private services sector”.
Fitch on Monday downgraded India’s growth outlook to negative, citing "heightened risks that India's medium- to long-term growth potential will gradually deteriorate if further structural reforms are not hastened".
It included among those risks measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments.
The negative outlook also reflects India's limited progress on fiscal consolidation, particularly on reducing the central government deficit despite improvement in the financial health of state governments, Fitch said in a statement.