Fitch Ratings raised its forecast for India’s economic growth in the current fiscal year to 7.2 percent, up from the previous projection of 7 percent in March. This upward revision is attributed to a rebound in consumer spending and increased investment.
For the fiscal years 2025-26 and 2026-27, Fitch has forecast growth rates of 6.5 percent and 6.2 percent, respectively. According to Fitch’s global economic outlook report, they anticipate the Indian economy to expand by a strong 7.2 percent in FY24/25.
Fitch’s estimates align with the projections of the Reserve Bank of India (RBI), which also expects the Indian economy to grow by 7.2 percent in the current fiscal year, driven by improving rural demand and moderating inflation.
Fitch anticipates that investment will continue to rise, albeit at a slower pace than in recent quarters, while consumer spending will recover due to heightened consumer confidence. Additionally, the purchasing managers survey data indicates sustained growth at the beginning of the current financial year.
The report highlights that the normalcy expected in the upcoming monsoon season is likely to support growth and stabilize inflation, although a recent heatwave poses a potential risk. Fitch also expects the growth in subsequent years to decelerate and approach its medium-term trend estimate, driven by consumer spending and investment.
In the last fiscal year (2023-24), the Indian economy grew by 8.2 percent, with a significant 7.8 percent expansion in the March quarter. Fitch anticipates that inflation will decline to 4.5 percent by the end of 2024 and average 4.3 percent in 2025 and 2026. Furthermore, Fitch expects the RBI to reduce policy interest rates by 25 basis points to 6.25 percent within this year.
