Fitch Ratings on Tuesday has lowered its forecast of contraction of the Indian economy for the fiscal to 9.4 per cent against 10.5 per cent contraction earlier, taking note of the sharper than expected growth in the second quarter of the current fiscal. Fitch kept its forecast for the next fiscal and the following year unchanged at 11 per cent and 6.3 per cent growth, respectively.

The report said the coronavirus-induced lockdown has inflicted severe economic scarring and the country needs to repair balance sheets and increase caution about long-term planning.

The projections compare to a GDP growth of 4.2 per cent in 2019-20 fiscal and 6.7 per cent annual expansion between 2015 and 2019.

Fitch said the Indian economy staged a sharper rebound in the July-September quarter from the coronavirus-induced recession. GDP fell 7.5 per cent year-on-year, up from -23.9 per cent in the April-June quarter.

Manufacturing enjoyed a sharp rebound and its output in the second-quarter reached the levels before the pandemic, with the autos and pharmaceuticals leading the revival. The rebound in the services sector was more muted amid continued social distancing.