Fitch Ratings on Thursday raised its forecast for India’s economic growth to 7 per cent for the next fiscal year from 6.5 per cent on the back of strong domestic demand and sustained level of business and consumer confidence.

Fitch also jacked up the growth rate for this fiscal to 7.8 per cent from 6.9 per cent made in January.

For the world, Fitch Ratings has raised its 2024 global GDP growth forecast by 0.3 percentage points to 2.4 per cent, as near-term prospects have improved.

For India, Fitch Ratings said, “With GDP growth having exceeded 8 per cent for three consecutive quarters, we expect an easing in growth momentum in the final quarter of the current fiscal year, implying an estimate of 7.8 per cent for growth in 2023-24.”

Recent quarterly data has shown that GDP is rising much faster than gross value-added — indirect taxes net of subsidies is the difference between the two — and this vast gap may normalise.

It said that strong business survey data for January and February represents an upside risk to these estimates.

Core inflation measures are steadily declining, underlining that developments in food prices (which account for around half of India’s consumer price index) will be key to inflation developments and the pace at which inflation will approach the Reserve Bank of India’s (RBI) 4 per cent mid-point of its 2 per cent-6 per cent target band.

Core inflation is inflation excluding the food and fuel prints.

“We expect headline inflation to steadily decrease to 4 per cent by calendar year-end on the assumption that recent food price volatility will subside,” it said.

Shares rebound

Benchmark indices on Thursday bounced back nearly 0.70 per cent amid recovery in small and mid-cap stocks after the wholesale inflation rate moderated to a four-month low in February and Fitch jacked up India’s growth forecast to 7 per cent for the next fiscal year.

The relief rally came after a brutal Wednesday which saw the Sensex crashing
more than 900 points and the broader markets taking deeper cuts.

The 30-share Sensex after opening lower at 72570.10 bounced back on buying in IT and other segments such as Bharti Airtel and Mahindra.

It rose more than 600 points before paring some gains to close higher by 335.39 points, or 0.46 per cent, to end at 73097.28.