Fitch Ratings has raised India's Gross Domestic Product (GDP) growth forecast for current fiscal (FY25) to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment. For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively. Fitch's estimates are in line with that of the Reserve Bank of India (RBI), which also projected Indian economy to expand 7.2 per cent in FY25 on the back of improving rural demand and moderating inflation.
Fitch said investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence. It said purchasing managers’ survey data point to continued growth at the start of the current financial year. It said signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.
It noted that the Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter. Fitch expects inflation will decline to 4.5 per cent by end 2024 and average 4.3 per cent in 2025 and 2026. It also expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.
