Fitch Ratings adjusted its forecast for India's GDP growth for the current fiscal year on Wednesday, raising it from 6.4% to 6.9%. This increase is attributed to sustained economic growth observed in the June quarter, as well as the overall resilience of the country's economy.
According to Fitch data, the pace of economic growth in India is likely to slow down during the remainder of the fiscal year. This expectation prompts the Reserve Bank of India (RBI) to raise interest rates by 0.25 percentage points during its October monetary policy meeting.
Growth in the June quarter reached 7.8%, which, according to Fitch, indicates the Indian economy's ability to withstand the shock caused by the US-Iran war, despite deteriorating trade conditions in the first half of 2026.
Analysts noted that PMI survey data points to slower expansion rates in both the manufacturing and services sectors. Furthermore, rising inflation will constrain consumer demand and real incomes, while insufficient monsoon rains will negatively affect agriculture and rural domestic demand.
Nevertheless, Fitch added that private investment prospects look more optimistic, with investments expected to grow by more than 10 percent. Meanwhile, non-agricultural credit growth reached 19% year-on-year in July.
Fitch specified that overall GDP growth will be 6.9% (up from 6.4% in June). Considering the combination of high demand, rising prices, and adverse supply factors, Fitch forecasts that the RBI will raise rates by 25 basis points in October of this year to 5.5%. Further growth is expected to reach 5.75% at the beginning of 2027, after which rates should decrease to 5.5% in 2028.
Previously, S&P Global Ratings had forecasted India's GDP growth for the 2027 fiscal year at 7%, which aligns with the forecast made by Moody's Ratings last week. It is worth noting that in the previous fiscal year (2025-26), the Indian economy grew by 7.8%.
