Fitch Ratings upgraded its forecast for India’s economic growth in the current fiscal to 7.2 per cent, citing rising consumer confidence and investment. This marks a 0.2 percentage point increase from their March projection.
“India’s GDP is set to expand by a robust 7.2 per cent in FY24-25,” said Fitch in a note accompanying their latest global economic outlook. Investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence.
The revision aligns with the RBI’s recent forecast, fuelled by positive rural demand and moderating inflation.
While the Asian Development Bank (ADB) estimates growth at 7 per cent, S&P Global Ratings and Morgan Stanley project a growth rate of 6.8 per cent. Moody’s Ratings and Deloitte India estimates India’s GDP to grow at 6.6 per cent in 2024-25 fiscal.
The Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter.
For 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively. The rating agency projects India’s growth to moderate in the coming years, settling around their medium-term trend estimate.
Fitch also expects inflation to cool down to 4.5 per cent by year-end, potentially prompting the RBI to cut policy interest rates by 25 basis points to 6.25 per cent.
While consumer price inflation has shown only slight reduction year-to-date, settling at 4.7 per cent in May compared with 5.7 per cent in December 2023, there are positive signs for a normal monsoon season which could further stabilise inflation.
Government forecasts predict above-average rainfall during the June-September monsoon season, potentially mitigating inflationary risks associated with food price spikes.