Fitch Ratings has revised its growth forecast for the Indian economy, projecting a robust expansion of 7.2% for the current fiscal year, up from the previous estimate of 7%.
The rating agency highlighted a sustained increase in investment and a recovery in consumer spending, driven by elevated consumer confidence.
Fitch's projections for the fiscal years 2025-26 and 2026-27 are growth rates of 6.5% and 6.2%, respectively. "We expect the Indian economy to expand by a strong 7.2% in FY24/25, an upward revision of 0.2 percentage points from the March GEO," Fitch stated in its global economic outlook report.
These estimates align with the Reserve Bank of India's (RBI) projection earlier this month, which also forecast a 7.2% expansion in the current fiscal year. The RBI cited improving rural demand and moderating inflation as key drivers.
Fitch noted that investment will continue to rise, albeit more slowly than in recent quarters, while consumer spending is expected to recover, driven by elevated consumer confidence. Purchasing managers survey data indicate continued growth at the start of the current financial year.
The report highlighted that a more normal monsoon season should support growth and stabilize inflation, although a recent heatwave poses a risk. "We expect growth in later years to slow and approach our medium-term trend estimate," Fitch added, emphasizing that growth will be driven by consumer spending and investment.
The Indian economy grew by 8.2% in the last fiscal year (2023-24), with a 7.8% expansion in the March quarter. Fitch expects inflation to decline to 4.5% by the end of 2024, averaging 4.3% in 2025 and 2026.
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