📷 Image Credits: Moneycontrol
Fitch Ratings has revised its growth forecast for India, projecting a 7.2% expansion for the fiscal year 2024-25, up from the previous estimate of 7%. The increase is attributed to a surge in consumer spending and higher investment levels. Looking ahead, Fitch anticipates growth rates of 6.5% and 6.2% for the fiscal years 2025-26 and 2026-27, respectively. In its global economic outlook report, Fitch stated that the Indian economy is expected to grow robustly, with a positive outlook for the upcoming financial years.
The recent projections align with the Reserve Bank of India’s (RBI) forecast of a 7.2% expansion in the current fiscal year, supported by improved rural demand and a decline in inflation. Fitch highlighted that while investment will continue to rise, the pace may slow compared to previous quarters. Additionally, consumer spending is set to recover as consumer confidence remains high, indicating a positive sentiment in the market.
According to Fitch, indicators from the purchasing managers survey point towards sustained growth at the beginning of the current financial year. The upcoming monsoon season, expected to be more normal, is predicted to bolster growth and stabilize inflation levels. However, the recent heatwave poses a potential risk to the economic outlook. Fitch emphasized that growth in the subsequent years is likely to decelerate, nearing the medium-term trend estimate, with consumer spending and investment acting as key drivers.
In the previous fiscal year (2023-24), the Indian economy expanded by 8.2%, with the March quarter witnessing a 7.8% growth. Fitch forecasts a decrease in inflation to 4.5% by the end of 2024, averaging at 4.3% for 2025 and 2026. The agency also predicts a 25 basis point cut in policy interest rates by the RBI, bringing it down to 6.25% by the end of the year. The positive outlook for India’s economic growth signals a promising trajectory for the nation’s financial landscape in the coming years.
