New Delhi, Dec 4: Driven by robust domestic demand and tax reforms, Fitch Ratings on Thursday revised India’s GDP growth forecast for FY26 to 7.4 per cent, from 6.9 per cent projected earlier.
The global rating agency said that private consumer spending is the main driver of growth in the country this fiscal, “supported by strong real income dynamics, increased consumer sentiment, and the impact of recently implemented goods and services tax reforms”.
For FY27, Fitch expects India’s growth to ease to 6.4 per cent with domestic demand remaining the key driver. According to the global rating agency, public investment growth is likely to moderate, while private investment should pick up in the second half of FY27.
India’s real GDP growth surged by 8.2 per cent during the July-September quarter of 2025-26.
According to Fitch, the growth comes despite India facing one of the highest effective tariff rates on its exports to the US of around 35 per cent, and an India-US trade deal would “boost external demand”.
Fitch projects India inflation to average 1.5 per cent this fiscal. India’s consumer inflation fell to 0.3 per cent in October.
The cooling inflation should allow the Reserve Bank of India (RBI) room for one more rate cut on December 5 to bring the policy rate to 5.25 per cent, it added. Fitch believes the RBI is at the end of its easing cycle and will keep rates steady over the next two years.
The three-day MPC meeting comes at a time when inflation is at an all-time low and GDP growth on a high trajectory path.
The global rating agency also expects the rupee to strengthen next year to around 87 per dollar.
Fitch Ratings has also raised its world growth forecasts for 2025 moderately since the June Global Economic Outlook (GEO) on better-than-expected incoming data for Q2 2025.
But there is now evidence of an underlying US slowdown in ‘hard’ economic data and positive surprises on eurozone growth have partly reflected US tariff front-running. Fitch still expects world GDP to slow significantly this year.
—IANS