Fitch's Estimates Indian Economy To Expand 7.2% In Current Fiscal

Fitch Ratings on Tuesday raised India's growth forecast from 7 per cent projected in March to 7.2 per cent for the current fiscal, citing a recovery in consumer spending and increased investment. Fitch projected growth rates of 6.5 per cent and 6.2 per cent for the fiscal years 2025-26 and 2026-27, respectively.

In its global economic outlook report, Fitch expects an upward revision of 0.2 pp from the March GEO in the Indian economy as it expands by a strong 7.2 per cent in FY24/25. Earlier this month, the Resever Bank of India (RBI) also projected the country's economy likely to expand 7.2 per cent in the current fiscal on the back of improving rural demand and moderating inflation in line with Fitch's estimates.

The investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said. Purchasing managers' survey data point to continued growth at the start of the current financial year according to Fitch.

Even though the recent heatwave posed a risk, signs of the coming monsoon season being more normal are said to support growth and make inflation less volatile. "We expect growth in later years to slow and approach our medium-term trend estimate," Fitch added.

In the last fiscal The Indian economy grew 8.2 per cent, with a 7.8 per cent expansion in the March quarter. Further, Fitch expects that inflation will decline to 4.5 per cent by the end of 2024 and average 4.3 per cent in 2025 and 2026.

It expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.