Fitch Ratings has raised India's GDP growth forecast for the current fiscal (FY26) to 7.4 per cent, from 6.9 per cent in September, on increased consumer spending and improved sentiment boosted by GST reforms. It said GDP growth accelerated further in the July-September quarter to 8.2 per cent, from 7.8 per cent in the April-June quarter. It also expects GDP growth to slow to 6.4 per cent in FY27.
Fitch in its Global Economic Outlook report for December said private consumer spending is the main driver of growth this year, supported by strong real income dynamics, increased consumer sentiment, and the impact of recently implemented goods and services tax (GST) reforms. It projected private investment to pick up in the second half of the next fiscal (2026-27) as financial conditions loosen.
It noted that consumer price inflation fell to an all-time low of 0.3 per cent in October, driven by lower food and drink prices. It said falling inflation gives the Reserve Bank of India (RBI) room for one more policy rate cut in December to 5.25 per cent, following 100 bp of cuts in 2025 so far. With core inflation recovering and activity projected to remain strong, Fitch said that it expects the RBI to have reached the end of its easing cycle, and that rates will remain at 5.25 per cent over the next two years.
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