Fitch Ratings upgraded India’s growth forecast for the current fiscal year to 7.2 percent from the 7 percent predicted in March, attributing the increase to a resurgence in consumer spending and higher investment.
For the fiscal years 2025-26 and 2026-27, Fitch forecasts growth rates of 6.5 percent and 6.2 percent, respectively.
"We anticipate the Indian economy to grow robustly by 7.2 percent in FY24/25 (a 0.2 percentage point upward revision from the March Global Economic Outlook)," Fitch stated in its global economic outlook report.
These estimates align with the Reserve Bank of India (RBI), which earlier this month also projected a 7.2 percent expansion for the current fiscal year, bolstered by improving rural demand and easing inflation.
While investment is expected to continue increasing, it will do so at a slower pace compared to recent quarters. Meanwhile, consumer spending is projected to recover, supported by heightened consumer confidence, according to Fitch.
Data from purchasing managers’ surveys indicate ongoing growth at the start of this financial year.
Fitch noted that signs of a normal upcoming monsoon season should aid growth and stabilize inflation, although a recent heatwave presents a potential risk.
"We expect growth to decelerate in subsequent years and align with our medium-term trend estimate," the report added, highlighting that growth will be driven by consumer spending and investment.
The Indian economy expanded by 8.2 percent in the last fiscal year (2023-24), with a 7.8 percent growth rate in the March quarter.
Fitch projects inflation to decrease to 4.5 percent by the end of 2024, averaging 4.3 percent in 2025 and 2026.
Fitch also anticipates the RBI will reduce policy interest rates by 25 basis points this year, bringing them to 6.25 percent.
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