Advertisement
Fitch Ratings has upgraded India's GDP growth forecast for the current fiscal year to 6.9%, citing robust growth in the April-June quarter and strong domestic consumption. This is the first upward revision by a global agency after earlier downgrades due to trade uncertainties. While trade tensions with the US and higher tariffs pose challenges, government reforms in the Goods and Services Tax are expected to support consumer spending. Growth is projected to moderate in the second half of the fiscal year, with future fiscal years seeing slower, yet steady expansion.
Fitch Ratings has raised India's GDP growth estimate for the ongoing fiscal year to 6.9%, up from its previous forecast of 6.5%, pointing to strong economic activity and domestic consumption. The agency highlighted that India's real GDP expanded 7.8% year-on-year in the April-June quarter, compared to 7.4% in the January-March period. Earlier, Fitch had anticipated a 6.7% growth for the April-June quarter. Advertisement
The agency noted that trade tensions with the US have intensified, with American tariffs on Indian imports increasing to 50% from August 27. Fitch expects these tariffs will likely be negotiated down eventually, but acknowledged that the ongoing uncertainty could affect business sentiment and investment. The recent Goods and Services Tax reforms, which came into effect from September 22, are expected to modestly boost consumer spending through the rest of this fiscal year and the next.
Fitch emphasized that domestic demand remains the main driver of growth, supported by rising real incomes and relatively loose financial conditions, which are likely to encourage investment. However, the agency expects economic growth to slow during the second half of the fiscal year.
Looking ahead, Fitch projected India's GDP to grow 6.3% in FY27 and 6.2% in FY28. Among global agencies, Fitch's FY26 estimate is the most optimistic. For comparison, India's Finance Ministry had projected growth between 6.3% and 6.8%, while the Reserve Bank of India, Asian Development Bank, and S&P Global Ratings estimated 6.5%. Moody's expects 6.3% growth for the 2025 calendar year, with the IMF and World Bank projecting 6.4% and 6.3%, respectively.
Fitch also expects food price pressures to remain subdued due to above-average monsoon rainfall and large food stockpiles, forecasting inflation to rise to 3.2% by the end of 2025 and 4.1% by end-2026. The agency anticipates the Reserve Bank of India to reduce policy rates by 25 basis points towards year-end and maintain them through 2026, with rate hikes expected to start in 2027.
Source PTI
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
