Global ratings agency, Fitch Ratings, revised its India GDP growth forecast for the current fiscal from 6.5 per cent to 6.9 per cent on the back of better-than-expected real GDP figures between the March and June quarters.
In its Global Economic Outlook (GEO)-September, Fitch said the pace of economic activity accelerated sharply between the March and June quarters of current fiscal years, with real GDP growth rising to 7.8 per cent year-on-year, from 7.4 per cent in January-March.
"On the back of the 2Q25 (April-June) outturn, Fitch has revised up its forecast for the fiscal year ending March 2026 (FY26) to 6.9 per cent from 6.5 per cent in the June GEO," it said.
Attributing domestic demand to be the key driver of growth, Fitch said strong real income dynamics will support consumer spending and loosen-up financial conditions, encouraging investment.
However, the agency estimated a slower annual growth in the second half of the financial year, edging down to about 6.3 per cent in FY27 and 6.2 per cent in FY28.
Also Read: Fitch affirms India's rating on robust growth, external finances
Fitch is the first global rating agency to have upped India's GDP growth estimates for current fiscal year after the string of downward revisions by various agencies earlier this year due to trade and tariff uncertainties.
In its June GEO report, Fitch had forecast a 6.7 per cent growth for the April-June quarter.
Fitch said it took into account the rising trade tensions between India and the US in recent months, with the US imposing an additional 25 per cent tariff on imports from India as penalty for buying Russian oil. Effective August 27, Indian goods in US now attract a 50 per cent duty.
"We expect this will eventually be negotiated lower, but the uncertainty around trade relations will dampen business sentiment and potentially investment. The government has adopted reforms to the Goods and Services Tax to be effective from September 22, which should modestly boost consumer spending over the remainder of this and the next fiscal years," Fitch said.
Finance Ministry's Economic Survey had projected India's growth to be between 6.3-6.8 per cent in current fiscal year.
The Reserve Bank of India, the Asian Development Bank (ADB), and S&P Global Ratings projected India's GDP to expand 6.5 per cent in FY26.
Moody's Ratings estimates GDP to grow 6.3 per cent in 2025 calendar year.
The International Monetary Fund (IMF) and World Bank estimates GDP growth at 6.4 per cent and 6.3 per cent, respectively.
Fitch said it expects food price pressures to remain weak, in the context of above-average monsoon rainfall and high food stockpiles, so that inflation will only pick up to 3.2 per cent by end-2025 and 4.1 per cent by end-2026.
"We still expect the RBI to cut rates by 25 bps towards the end of the year, as it assesses the impact of the policy loosening already implemented, and that rates will stay there until end-2026. We expect the RBI to start raising rates in 2027," Fitch added.
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