India's growth rate to fall, fiscal deficit to rise: International rating agency Fitch

International rating agency Fitch sees a dip in India's economic growth and an increase in the fiscal deficit even as it expects the eurozone to continue to be volatile. Andrew Colquhoun, the senior director at Fitch Ratings tells CNBC-TV18 in an exclusive that they had rated India with a triple-B with a stable outlook.

This rating has been in place since 2006. Essentially Fitch looks through some of the current slowdown and tries to assess whether India's potential growth rate has slowed.

"For sometime we thought that India's potential growth was a kind of a trend growth as it was between 8 and 8.5% per year. We expect growth will slow to 7% in the fiscal year 2012, pick up to 7.5% in the fiscal year 2013," he says.

He also says that the credit ratings agency sees this as a cyclical slowdown and not as a structural deterioration in India's potential growth rate.

Slippage in the public finances that's been observed in the fiscal year to date, has Fitch considering it will take the budget deficit on the governments definition to between 5-5.5% of GDP against the budget projection of 4.6%.

"This isn't rating news it doesn't drive the rating because we expected that the deficit would turn out higher than the budget projection anyway. So that kind of fiscal slippage was already baked into the rating," he adds.

Colquhoun says the uncertain climate in the eurozone is bound to have its effects on Asia too. The volatility could even result in a cut in Asia's growth projection.

Fitch expects the situation with sovereign credit worthiness in the Euro area will remain a source of uncertainty and volatility. Globally, including for Asia over 2012, and of course markets hate uncertainty and that's likely to continue to weigh on confidence and hence on growth.

That is something Fitch has already taken a view on that by cutting their growth projections for Asia for 2012. "If the situation deteriorated further then we may need to look again, but we expect prospects of continued volatility from that source," says Colquhoun.

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