Global ratings agency Fitch Ratings on Friday lowered India's economic growth forecast to 4.6 per cent in 2019-20 due to domestic factors, in particular a squeeze in credit availability from non-banking financial companies (NBFCs), and deterioration in business and consumer confidence.

According to Fitch, growth is expected to be around 4.6 per cent this fiscal against an earlier estimate of over 5 per cent.

"Our outlook on India's GDP growth is still solid against that of our peers, even though growth has decelerated significantly over the past few quarters, mainly due to domestic factors, in particular a squeeze in credit availability from NBFCs and deterioration in business and consumer confidence," the Fitch report said.

"Fitch expects growth to slow to 4.6 per cent in the financial year ending March 2020 (FY20), from 6.8 per cent in FY19, which is still higher than the 'BBB' median of 2.8 per cent. We expect growth to gradually recover to 5.6 per cent in FY21 and 6.5 per cent in FY22 with support from easing monetary and fiscal policy and structural measures that may also support growth over the medium term," it added.

Further, Fitch Ratings kept India's credit worthiness indicated by its Long-Term Foreign-Currency Issuer Default Rating (IDR) unchanged at 'BBB-', stating that India's growth outlook was stable.

The agency said that India's rating balances on a still strong medium-term growth outlook, compared to 'BBB' category of peers, and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors, including governance indicators and GDP per capita.

"The affirmation of the ratings incorporates our expectation of moderate fiscal slippage relative to the Central government's fiscal deficit target of 3.3 per cent of GDP in FY20," the report said.

"The government is again facing a trade-off between stimulating the economy and reducing the deficit in the medium term. Some fiscal slippage has occurred in recent years against government targets, even during periods of sustained stronger growth," it added.

The FY20 deficit target has already been exceeded by end-October due to weak revenue intake, and a deceleration of nominal quarterly growth suggests further revenue pressure for the rest of the financial year.

"The government has indicated that its corporate tax rate cut could lower revenue by 0.7 per cent of GDP in FY20 and hopes to finance spending by more aggressive asset divestments, including Air India and Bharat Petroleum Corporation Limited," the ratings agency said.

"We believe there is a risk of more significant fiscal loosening in the event of continued weak GDP growth, for example, in the context of lingering problems in the NBFC sector," it said.