Fitch ratings increased India's development estimate to 6.4 percent for the next five years

New -delhi, May 22 (IANS) Global Rating Agency Fitch Ratings on Thursday increased Indian GDP growth for the next five years to 6.4 percent. The reason for this is the rapid increase in the country’s participation in the workforce over the past year. Fitch said: “Our estimate for India’s trend growth is 6.4 percent, which was 6.2 percent earlier. We think the TFP growth will slow from the past year and the long -term average of 1.5 percent will fit.” Total factor productivity (TFP), also known as multifactor productivity, is usually measured as a ratio of total production (GDP) and total input. The global rating agency reduced China’s growth estimates by 0.3 percent to 4.3 percent, earlier 4.6 percent. This change is part of the revised assessment of the possible growth of GDP for ten emerging market economies over the next five years. Fitch reported that the revised estimate for India shows more contribution than labor inputs (mainly in total employment) rather than labor productivity. The rating agency also made changes in its estimates based on the revised evaluation of the workforce data. Fitch said the contribution to the participation rate was revised upwards, while the estimated contribution of capital intensity was reduced. Fitch Ratings said: “Our amended estimates show that labor inputs (total employment) contribute more than labor productivity. India’s participation in the workforce has increased rapidly over the past few years; we hope this productivity will continue to increase.” Fitch Ratings director Robert Sierra said: “Our new update of emerging potential growth is now 3.9 percent, which shows a slight drop of our 4 percent estimate published in November 2023. This reflects mainly a low possible growth in China.” The global rating agency said that the low capacity of China could cause poor capital intensive and a sharp decline in participation in labor power. According to the IMF report released last month, India remains the fastest growing major economy in the world and is the only country that registers more than 6 percent in the next two years. The IMF has reduced the development forecast for more than 120 countries. -Ians abs/